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Home My WebLink About2013-017 Limited Tax General Obligation Bond for Street Improvements Financing [FUNDING ORDINANCE]CITY OF YAKIMA, WASHINGTON ORDINANCE NO. 2013-017 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF YAKIMA, WASHINGTON, AUTHORIZING THE ISSUANCE AND SALE OF A LIMITED TAX GENERAL OBLIGATION BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $5,000,000 FOR THE PURPOSE OF FINANCING COSTS OF STREET IMPROVEMENTS IN THE CITY; PROVIDING THE FORM OF THE BOND; AND AUTHORIZING THE SALE OF THE BOND TO U.S. BANK NATIONAL ASSOCIATION. Passed May 7, 2013 PREPARED BY: PACIFICA LAW GROUP LLP Seattle, Washington CITY OF YAKIMA ORDINANCE NO. 2013-017 TABLE OF CONTENTS* Page Section 1. Definitions and Interpretation of Terms 2 Section 2. Authorization of the Project 4 Section 3. Authorization of the Bond 4 Section 4. Registration, Exchange and Payments 5 Section 5. Form of Bond 6 Section 6. Execution of Bond 9 Section 7. Application of Bond Proceeds 10 Section 8. Tax Covenants 10 Section 9. Pledge of Funds and Credit; General Obligation 11 Section 10. Right of Prepayment 11 Section 11. Sale of the Bond 14 Section 12. Ongoing Disclosure; Covenants 14 Section 13. Lost, Stolen or Destroyed Bond 15 Section 14. Severability; Ratification 15 Section 15. Effective Date of Ordinance 16 Exhibit A: Proposal * This Table of Contents is provided for convenience only and is not a part of this ordinance. CITY OF YAKIMA, WASHINGTON ORDINANCE NO. 2013-017 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF YAKIMA, WASHINGTON, AUTHORIZING THE ISSUANCE AND SALE OF A LIMITED TAX GENERAL OBLIGATION BOND OF THE CITY IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $5,000,000 FOR THE PURPOSE OF FINANCING COSTS OF STREET IMPROVEMENTS IN THE CITY; PROVIDING THE FORM OF THE BOND; AND AUTHORIZING THE SALE OF THE BOND TO U.S. BANK NATIONAL ASSOCIATION. WHEREAS, the City Council (the "Council") of the City of Yakima, Washington (the "City"), has deemed it in the best interest of the City and its citizens that the City make certain street improvements in the City (the "Project"); and WHEREAS, the City is authorized by chapters 35.22 and 39.46 RCW to issue limited tax general obligation bonds to pay costs of the Project; and WHEREAS, the City has received the offer of U.S. Bank National Association (the "Bank") set forth in Exhibit A attached hereto (the "Proposal"), to purchase a limited tax general obligation bond of the City in the principal amount of not to exceed $5,000,000 (the "Bond") for the purpose of financing the Project; and WHEREAS, it is deemed necessary and advisable that the City accept the Bank's offer and issue the Bond as set forth herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YAKIMA, WASHINGTON, DOES ORDAIN AS FOLLOWS: Section 1. Definitions and Interpretation of Terms. (a) Definitions. As used in this ordinance, the following words shall have the following meanings: Bank means U.S. Bank National Association. Bond means the Limited Tax General Obligation Bond, 2013 authorized to be issued by the City pursuant to this ordinance. Bond Counsel means Pacifica Law Group LLP, Seattle, Washington. Bond Fund means the "Bond Redemption Fund" authorized to be created pursuant to Section 9 of this ordinance. Bond Register means the registration records for the Bond maintained by the Bond Registrar. Bond Registrar means the Director of Finance and Budget of the City, whose duties include registering and authenticating the Bond, maintaining the Bond Register, transferring ownership of the Bond, and paying the principal of and interest on the Bond. City means the City of Yakima, Washington, a municipal corporation duly organized and existing under the laws of the State of Washington. City Council or Council means the City Council of the City as the general legislative authority of the City, as the same shall be duly and regularly constituted from time to time. City Manager means the City Manager, or the successor of such office. Code means the Internal Revenue Code of 1986, as amended, and shall include all applicable regulations and rulings relating thereto. Default Interest Rate means the Interest Rate plus 2%. -2- 05/03/13 Director of Finance and Budget means the Director of Finance and Budget of the City, or the successor of such office. Interest Rate means a fixed rate of interest determined pursuant to Section 11 of this ordinance as the same may be adjusted pursuant to the Proposal and set forth herein. Prepayment Fee means the fee determined pursuant to Section 10 of this ordinance. Project means the project described in Section 2 of this ordinance. Project Fund means the "Project Fund" authorized to be created pursuant to Section 7 of this ordinance. Proposal means the proposal letter submitted by the Bank substantially in the form attached hereto as Exhibit A. Registered Owner means the person in whose name the Bond is registered on the Bond Register. Reset Date means each five year anniversary from the dated date of the Bond. Rule means the Securities and Exchange Commission's Rule 15c2-12 under the Securities Exchange Act of 1934, as the same may be amended from time to time. (b) Interpretation. In this ordinance, unless the context otherwise requires: (1) The terms "hereby," "hereof," "hereto," "herein," "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; (2) Words of the masculine gender shall mean and include correlative words of the feminine and neutral genders and words importing the singular number shall mean and include the plural number and vice versa; -3- 05/03/13 (3) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (4) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (5) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of the Project. The Bond is being issued to finance the costs of certain street and road improvements in the City (the "Project"). Section 3. Authorization of the Bond. For the purpose of financing costs of the Project and paying costs of issuance for the Bond, the City hereby authorizes the issuance and sale of its limited tax general obligation bond in the principal amount of not to exceed $5,000,000. The bond shall be designated the "City of Yakima, Washington, Limited Tax General Obligation Bond, 2013," or other such designation as set forth in the Bond and approved by the Director of Finance and Budget. The Bond shall be dated as of its date of delivery, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature five years from its dated date; provided, however, principal shall be amortized over a period not to exceed 15 years, as set forth in the Bond. The Bond shall bear interest from its dated date or the most recent date to which interest has been paid at the Interest Rate, as the same may be adjusted pursuant to the Proposal and set forth herein. Interest on the principal amount of the Bond shall be calculated -4- 05/03/13 per annum on a 30/360 basis, or as otherwise provided in the Bond. Principal of and interest on the Bond shall be payable monthly as set forth in the payment schedule attached to the Bond. At the option of the Bank and with the consent of the City Council, the term of the Bond may be extended on each five year anniversary of its dated date (each, a "Reset Date") for up to two additional five year terms, resulting in a final maturity of no later than fifteen years from the dated date of the Bond. Under the terms of the Proposal, the Bank is required to provide the City at least 180 days' notice of its intent to extend the term of the Bond. If the Bank offers to extend the term of the Bond, and the City Council determines that it is in the best interest of the City to approve such extension, the City Council shall authorize the extension by the adoption of a new ordinance or an amendatory ordinance establishing the terms and conditions, including any adjustment to the Interest Rate, for such extension. If the Bank has not offered to extend the term of the Bond, or if the City has determined that it is in the best interest of the City to prepay and redeem the Bond as provided in Section 10 hereof, all principal on the Bond, plus accrued interest, shall become due and payable on the Reset Date. Section 4. Registration, Exchange and Payments. (a) Registrar/Bond Registrar. The Director of Finance and Budget shall act as Bond Registrar. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bond if transferred or exchanged in accordance with the provisions of the Bond and this ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance. (b) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered Owner of the Bond as the absolute owner for all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary. Payment of the Bond shall be made only as described in subsection (e) below. All such payments made as described in -5- 05/03/13 subsection (e) below shall be valid and shall satisfy the liability of the City upon the Bond to the extent of the amount so paid. (c) No Transfer or Exchange of Registered Ownership. The Bond shall not be transferrable without the consent of the City unless (i) the Bank's corporate name is changed and the transfer is necessary to reflect such change; or (ii) the transferee is a successor in interest of the Bank by means of a corporate merger, an exchange of stock, or a sale of assets. (d) Registration Covenant. The City covenants that, until the Bond has been surrendered and canceled, it will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code. (e) Place and Medium of Payment. Both principal of and interest on the Bond shall be payable in lawful money of the United States of America. Principal and interest on the Bond shall be payable by check, warrant, ACH transfer or by other means mutually acceptable to the Bank and the City. Upon final payment of principal and interest of the Bond, the Registered Owner shall surrender the Bond for cancellation at the office of the Bond Registrar in accordance with this Section 4 and Section 13. Section 5. Form of Bond. The Bond shall be in substantially the following form: UNITED STATES OF AMERICA NO.R-1 $ STATE OF WASHINGTON CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION BOND, 2013 INTEREST RATE: MATURITY DATE: REGISTERED OWNER: PRINCIPAL AMOUNT: , 2018 U.S. BANK NATIONAL ASSOCIATION MILLION AND NO/100 DOLLARS The City of Yakima, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to -6- 05/03/13 owe and for value received promises to pay to the Registered Owner identified above, on or before the Maturity Date identified above, the Principal Amount identified above. This bond shall bear interest at the fixed rate stated above (the "Interest Rate"). Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be payable monthly on the dates set forth in the payment schedule attached hereto. The Maturity Date of this bond may be extended at the option of U.S. Bank National Association and with the consent of the City, as provided in the hereinafter defined Bond Ordinance. Both principal of and interest on this bond shall be payable in lawful money of the United States of America. Principal and interest on this bond shall be payable by check or warrant or by other means mutually acceptable to the Registered Owner and the City. Upon final payment of principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the City (the "Bond Ordinance"). This bond is issued pursuant to the Bond Ordinance, to finance the costs of certain street improvements and to pay costs of issuance. Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. The City may prepay this bond as provided in the Bond Ordinance. Any such prepayment may be subject to a Prepayment Fee. This bond has been designated by the City as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Code. The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the "Bond Redemption Fund" (the "Bond Fund"). The Bond Fund shall be drawn upon for the sole purpose of paying the principal of and interest on this bond. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and . levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. Any proceeds of this bond not expended on the Project or costs of issuance shall be pledged to payment of this bond and deposited in the Bond Fund for such purpose. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued pursuant to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. -7- 05/03/13 It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond exist, have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor of the City Council and attested by the manual or facsimile signature of the Clerk, as of this 7th day of May, 2013. [SEAL] ATTEST: ity Cl CITY OF YAKIMA, WASHINGTON tISTRATION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City, in the office of the Director of Finance and Budget of the City (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City from the Bond Fund. Date of Registration Name and Address of Registered Owner Signature of Bond Registrar , 2013 U.S. Bank National Association Government Banking Division Director of Finance and 9th Floor (EP-MN-S9GB) Budget 101 East 5th Street St. Paul, MN 55101-1860 PAYMENT SCHEDULE Principal and interest on this bond shall be payable as set forth in the following schedule: 05/03/13 Date Principal Interest Total Payment Section 6. Execution of Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile signature of the Clerk. Only such Bond as shall bear thereon a Certificate of Authentication in the form earlier recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered hereunder and is entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Bond shall cease to be an officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon the City as though those who signed the same had continued to be such officers of the City. The Bond may also be signed and attested on behalf of the City by such persons who at the date of the actual execution of the Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. -9- 05/03/13 Section 7. Application of Bond Proceeds. The City shall establish a fund designated the "Project Fund" (the "Project Fund") into which the proceeds of the Bond shall be deposited. Money in the Project Fund shall be used to pay the costs of the Project and costs of issuance for the Bond. The Director of Finance and Budget may invest money in the Project Fund in legal investments for City funds. Earnings on such investments shall accrue to the benefit of the Project Fund. Money remaining in the Project Fund after all costs of the Project and costs of issuance for the Bond have been paid shall be pledged to payment of the Bond and deposited in the Bond Fund for such purpose. Section 8. Tax Covenants. The City shall comply with the provisions of this section unless, in the written opinion of Bond Counsel to the City, such compliance is not required to maintain the exemption of the interest on the Bond from federal income taxation. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such Bond pursuant to Section 148 of the Code and the applicable regulations thereunder that will cause the Bond to be an "arbitrage bond" within the meaning of such Section and regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bond) and the applicable regulations thereunder throughout the term of the Bond. The City further covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" under Section 141 of the Code. The City hereby designates the Bond as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Code. The City reasonably does not expect to issue more than $10,000,000 in qualifying tax-exempt debt during calendar year 2013. -10- 05/03/13 Section 9. Pledge of Funds and Credit; General Obligation. The City hereby authorizes the creation of a fund to be used for the payment of debt service on the Bond, designated as the "Bond Redemption Fund" (the "Bond Fund"). No later than the date each payment of principal of or interest on the Bond becomes due, the City shall transmit sufficient funds, from the Bond Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Bond Fund may be invested in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as the Bond is outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an amount that will be sufficient, together with other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bond when due. The City hereby irrevocably pledges that the annual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each annual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bond will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the principal of and interest on the Bond. The full faith, credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bond when due. Section 10. Right of Prepayment. If the Bond is prepaid in accordance with this Section 10, interest shall cease to accrue on the date the Bank receives such prepayment. -11- 05/03/13 (a) Prepayment on any Reset Date. The Bond may be prepaid, in whole or in part, on any Reset Date without prepayment penalty or fee. (b) Prepayment not on a Reset Date. Except as provided for in Section (a) above, there shall be no prepayments of the Bond, provided that the Bank may consider requests for its consent with respect to prepayment of the Bond, without incurring an obligation to do so, and the City hereby acknowledges that in the event that such consent is granted, the City shall be required to pay the Bank, upon prepayment of all or part of the principal amount before final maturity, a fee (the "Prepayment Fee") equal to the maximum of: (1) zero, or (2) that amount, calculated on any prepayment date, which is derived by subtracting: (i) the principal amount of the Bond or portion of the Bond to be prepaid, from (ii) the Net Present Value of the Bond or portion of the Bond to be prepaid on such date of prepayment. For purposes of this section, the following definitions shall apply: "Net Present Value" means the amount which is derived by summing the present values of each prospective payment of principal and interest which, without such full or partial prepayment, could otherwise have been received by the Bank over the shorter of the remaining contractual life of the Bond or next repricing date if the Bank had instead initially invested the Bond proceeds at the Initial Money Market Rate. The individual discount rate used to present value each prospective payment of interest and/or principal shall be the Money Market Rate at Prepayment for the maturity matching that of each specific payment of principal and/or interest. "Initial Money Market Rate" means the rate per annum, determined solely by the Bank, on the first day of the term of the Bond or as mutually agreed uponby the City and the Bank, as the rate at which the Bank would be able to borrow funds in Money Markets for the amount of the Bond and with an interest payment frequency and principal repayment schedule equal to the -12- 05/03/13 Bond and for a term as may be arranged and agreed upon by the City and the Bank. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. The City hereby acknowledges that the Bank is under no obligation to actually purchase and/or match funds for the Initial Money Market Rate of the Bond. "Money Market Rate at Prepayment" means that zero-coupon rate, calculated on the date of prepayment, and determined solely by the Bank, as the rate in which the Bank would be able to borrow funds in Money Markets for the prepayment amount matching the maturity of a specific prospective Bond payment or repricing date. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. A separate Money Market Rate at Prepayment will be calculated for each prospective interest and/or principal payment date. "Money Markets" means one or_ more wholesale funding mechanisms available to the Bank, including negotiable certificates of deposit, eurodollar deposits, bank notes, fed funds, interest rate swaps, or others. In calculating the amount of such a prepayment fee, the City hereby authorizes the Bank to make such assumptions regarding the source of funding, redeployment of funds and other related matters, as the Bank may deem appropriate. If the City fails to pay any Prepayment Fee when due, the amount of such Prepayment Fee shall thereafter bear interest until paid at the Default Interest Rate (computed on the basis of a 360 -day year, actual days elapsed). Any prepayment of principal shall be accompanied by a payment of interest accrued to date thereon; and said prepayment shall be applied to the principal installments in the inverse order of their maturities. All prepayments shall be in an amount of at least $100,000 or if less, the remaining entire principal balance of the Bond. -13- 05/03/13 Section 11. Sale of the Bond. The Bond shall be sold to the Bank pursuant to the terms of this ordinance and the Bank's Proposal. The City hereby accepts the Bank's Proposal, which is attached as Exhibit A. The City Manager is hereby authorized to approve the Interest Rate and the principal amount of the Bond and to agree to any other terms, conditions and covenants that are in the best interest of the City and in accordance with the Bank's Proposal so long as (a) the principal amount of the Bond does not exceed $5,000,000, and (b) the Interest Rate for the Bond does not exceed 2.25%. The appropriate City officials, including but not limited to the City Manager and the Director of Finance and Budget, are hereby authorized and directed to do everything necessary for the prompt issuance, execution and delivery of the Bond and for the proper application and use of the proceeds thereof. Section 12. Ongoing Disclosure; Covenants. (a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements of the Rule. (b) Covenants. So long as the Bond is outstanding, the City hereby covenants and agrees as follows: (1) To maintain rates, fees and revenues of the City at least equal to 1.00 times the annual debt service on all limited tax general obligation debt of the City, including the Bond. Failure to maintain such ratio for two consecutive years will result in an automatic adjustment of the Interest Rate to the Default Interest Rate; (2) To provide the Bank copies of the City's audited financial statements within 330 days of the end of each fiscal year; and -14- 05/03/13 (3) financial or other information as may be reasonably requested from time to time. Section 13. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or destroyed while in the Registered Owner's possession, the Bond Registrar may at the request of the Registered Owner execute and deliver a new Bond of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon its filing with the City written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. In the case the Bond shall be lost, stolen, or destroyed while in the Registered Owner's possession, the Registered Owner may elect upon final payment of principal and interest of the Bond to surrender a photocopy of the Bond for cancellation at the office of the Bond Registrar together with written certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. Section 14. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and confirmed. -15- 05/03/13 Section 15. Effective Date of Ordinance. This ordinance shall be effective after its passage as provided by law. ADOPTED by the City Council of the City of Yakima, Washington, at a regular meeting thereof held this 7th day of May, 2013. ATTEST/AUTHENTICATED: pi, ',AIR di/44i onya C1.. Tee, City Clerk N I ll r �* Of' f% `if Approved as to form: Deanna Gregory, Pacifica Lroup LLP Filed with the City Clerk: Passed by the City Council: May 7, 2013 Ordinance No. 2013-017 Date of Publication: May 10, 2013 Effective Date: June 9, 2013 -16- CITY OF YAKIMA, WASHINGTON Micah Cawley, ayor 05/03/13 Exhibit A Bank's Proposal (attached) 05/03/13 Memorandum To: The Honorable Mayor and Members of City Council From: Cindy Epperson, Director of Finance and Budget Tara Lewis, Financial Services Manager Date: 5/1/2013 Re: Street Project Financing In addressing the strategic priority Built Environment, the 2013 budget includes a Street Improvement Project. This Project will resurface approximately 28 lane miles of arterial streets at an approximate cost of $5 million and be funded by debt. Debt service of $300,000 was budgeted for 2013 with the anticipation of budgeting approximately $350,000 per year over a 20 year amortization. Several types of financing tools are available for Washington cities. Whenever the City needs to finance a project, an analysis is done to determine the most effective method to use. Cost of the financing, risk and repayment terms are key factors that affect the debt -vehicle best suited to the City's needs. Generally, the City can self -fund a project through reserves and/or interfund loans, issue bonds on the market or privately, participate in a State bond issue or obtain a loan from a banking institution. For equipment, capital leases and/or corporate financing are also used from time to time, although these tend to be more costly. The repayment terms anticipated in the Budget exclude interfund loans as state law requires such loans to be fairly short in duration (recommendation of 3 years or less). Participation in a State bond issue as was done for our recent purchases of new fire apparatus is also not an option in this case because the State will not finance infrastructure (they require an asset they can foreclose and sell in the event of default). The remaining options are bond issue or bank financing. A bond issue is very expensive by nature. The City must employ an underwriter as well as bond counsel to work through the complex process of offering bonds for sale on the public bond market. SEC regulation drives much of that cost. For our $5 million, the cost of underwriter and bond counsel are estimated to be between $40,000 and $50,000. Interest rates on a public long term issue are likely to be fairly high -- in the neighborhood of 5%. These costs combine to make bond financing unattractive for this sort of project where other alternatives are available to us. Bank financing is available with a bit of a twist. The bank offers a loan for which the City issues a single bond at a much more desirable interest rate for a short (5 or 7 year) term. At the end of that term, the bank is allowed to reset the rate to accommodate market changes that have occurred. The reset is based on the U.S. Treasury bill rates using a predetermined formula. The May 1, 2013 bank also has the option to "put" the loan back to the City at any reset date if it wishes to discontinue the financing or if the bank and the City cannot agree on terms for future extensions. Although the resets and potential for the bank to put the loan back to the City adds some risk to the equation, the reset risk is primarily limited to market factors and the put risk is considered substantially mitigated by the City's good credit rating, healthy reserve balances and access to other forms of credit. The more substantial risk factor is that at the time of extension (reset date) the extension of the debt for the next term is legally a form of debt reissuance or refinancing. Therefore any legal or regulatory changes in municipal financing will come to bear on the extension term. The reissuance will also count toward the $10 million annual debt issuance limit for tax exemption on bond interest. To mitigate these risks the bank is offering a full 180 days notice to the City of its intent to extend the loan another term or not. This will give the City adequate time to pursue other options in the unlikely event that it should become necessary. Another step taken to mitigate this risk was the restructuring the original proposal of a 20 year amortization to only 15 years. Due to the current dip in the interest rate market along with the bank's willingness to lock the rate, accompanied by a modest increase in the proposed annual debt service amount (from $350,000 to $380,000), the City will be exposed to only two reset dates over the entire life of the debt instead of three exposure dates in a 20 year amortization. Bank financing is generally much less expensive than issuing bonds for sale. The bank treats the financing as a loan and the City issues a single bond to be held by the bank for the duration of the financing term. While bond counsel is still a necessary component, due to the substantially lower risk of a bank financing the fee for bond counsel is approximately 40% lower. The use of an underwriter is not necessary. We estimate that the City will save about $40,000 in direct costs, as well as use fewer staff resources, as preparation of an official statement is time-consuming. In the process we approached several banks about our financing needs. Their initial proposals were reviewed by the Built Environment Committee. Our two main banks, U.S. Bank and Key Bank were the most flexible and willing to work with our Bond Counsel to revise language and terms to meet the City's needs. The U.S. Bank proposal was most attractive, both in terms of cost and risk for several reasons. The Bank has waived their standard loan origination fee. It has waived the bank counsel fees in that the bank is willing to rely on City's Bond Counsel for legal issues. The Bank has already locked the interest rate as a courtesy to take advantage of a recent dip in rates pending Council approval of the Bond Ordinance. And the Bank has committed to notify the City a full 180 days in advance of reset dates whether they wish to extend for another 5 year term or terminate the agreement. These factors, along with the history of our excellent working relationship with them distinguished U.S. Bank as the clear choice for this Project financing. City engineering staff has put the construction project out to bid --Note: the bid opening was held on April 30, and low bid was well under the $5 M threshold. It is likely that we can add several lane miles to the project and stay within budget. Staff will evaluate options for the additional funding availability and will award the bid within the next 30 days. Bids are being received at this time for a scheduled summer construction phase. 2 embank. All of us serving you - Herbert F. Neufeld Vice President & Community Banking Credit Liaison U.S. Bank National Association Government Banking Division 9th Floor (EP-MN-S9GB) 101 East 5th Street St. Paul, MN 55101-1860 April 26, 2013 Tara Lewis, CPA Financial Services Manager City of Yakima 129 N. Second St. Yakima, WA 98901 Re: $5 million paving financing U.S. Bank National Association ("U.S. Bank") is pleased to consider your request to provide financing to the City of Yakima, Washington ("City"). A summary of some of the terms U.S. Bank is considering for this financing package is as follows: Re: $5 Million City of Yakima, Washington Non -voted General Obligation Bond ("Bond") The Bond financing to the City, is for the permanent financing for City pavement improvements. Fixed Rate Bond: Amount: $5 Million Length: 5 years (15 -year amortization) Rate Reset: Each 51h year anniversary (not less than 180 days notice to the City). Put Option: U.S. Bank retains the right to put the loan back to City each 51h year. There can be no automatic extension. Interest Rate Features: All rates are subject to change with market conditions until formally locked by an agreement between the City and U.S. Bank. All rates assume a 30/360 -day interest accrual basis. All rates assume that the City and legal counsel will designate the Bond as tax-exempt (bank qualified) under existing federal tax regulations. Interest Rates: A fixed rate, based upon an indicative rate of 1.67% per annum as of April 26, 2013, such rate to be adjusted as of the date of funding so as to maintain the same margin over U.S. Bank's cost of funds as that which is included in the above indicative rate. The rate will be reset each 51h anniversary for the duration of the Bond. Payments: Rate, above, assumes monthly interest and monthly principal payments that result in, essentially, level annual debt service requirements over the 15 -year amortization period. Prepayments: Prepayment is allowed, in whole or in part, on any rate reset date without prepayment fee. Otherwise, prepayment of the Bond is not expected. However, prepayments may be allowed by U.S. Bank on other than a rate reset date but will be subject to U.S. Bank's standard breakfunding prepayment provisions. Prepayments allowed by U.S. Bank may, therefore, incur a prepayment fee if the future market (at the time of prepayment) is one of lower interest rates than the market was at the original closing date. U.S. Bank's standard "breakfunding" prepayment language will be provided to legal counsel for inclusion in the documents. Put Option: U.S. Bank has the option to "put" the loan back to the City should it decide not to offer a 5 -year maturity extension or if the City and U.S. Bank cannot agree on a new interest rate or other bond provisions for the next 5 year period. U.S. Bank will provide 180 days notice should it decide to not extend the loan for an additional 5 year term. Should U.S. Bank and the City not mutually agree on a new interest rate and/or changes to the payment or structure provisions or if the Bank fails to reset the rate, the loan will mature in the 51h year. Default Interest Rate: The default interest rate will be the stated rate plus 2%. Security: The Bond will be a non -voted general obligation of the City. U.S. Bank will not take a subordinate lien position or be in a less than senior level position to any other financing. Bond Counsel: The loan documents and an unqualified legal opinion must be provided by a nationally recognized bond counsel that is currently listed in the "Red Book" more formally known as the Bond Buyer's Municipal Marketplace ("Bond Counsel"). The Pacifica Law Group is acceptable to U.S. Bank to perform as Bond Counsel. Costs: Various costs, expenses and fees relating to due diligence and Bond documentation, including all legal fees and expenses are the responsibility of the City. U.S. Bank will not charge its customary $5,000 set-up fee. U.S. Bank does not expect to require separate Bank Counsel for this financing and will be permitted to rely on the documents and legal opinion of the City's Bond Counsel. Covenants: The City will covenant to maintain rates, fees, and revenues to result in a minimum debt service coverage (funds available for debt service divided by the amount of debt service) of 1.00 times. Failure to maintain this coverage ratio for 2 consecutive years will result in an automatic adjustment of the interest rate to the Default Interest Rate. The City will covenant to automatically provide the Government Banking Division of U.S. Bank with copies of its annual, audited financial statements within 330 days of the end of each fiscal year for the duration of the Bond. Other: U.S. Bank's continued involvement with this financing is predicated upon U.S. Bank obtaining credit approval of the various terms, conditions, and creditworthiness of the City. The credit approval process includes the mandatory analysis of the City's most recent three years of audited financial statements. We hereby acknowledge our possession of those audited financial statements. Documentation will include standard covenants regarding maintenance of business operations, adequate insurance coverage, agreement to take all actions necessary to preserve tax-exempt status of the obligation, and to collect fees, taxes and other revenues in an amount sufficient to meet all City obligations, including debt service on this Bond. All funds transfers must be directly deposited to a U.S. Bank account. Documentation for the transaction will be prepared by Bond Counsel and will include an appropriate authorizing resolution or ordinance, 8038 filing, and Bond Counsel opinion that the Bond is a legal, valid, binding, enforceable and properly authorized obligation of the City. The City will designate the Bond as a "tax-exempt, bank qualified obligation" under section 265(b) of the Internal Revenue Code of 1986, as amended, for investment by financial institutions. As we obtain more information, additional substantive conditions will be required and terms may be changed or be supplemented. In addition, upon completion of our analysis and due diligence and if we obtain credit approval of this proposal, Bond Counsel will prepare loan documentation which will include terms and conditions customary to U.S. Bank, as well as warranties and covenants specific to this transaction. To that end, this letter is an expression of interest only, and it is not a contract, commitment nor intent to be bound. U.S. Bank does not intend that this letter or discussions relative to the terms of this letter create any legal rights or obligations, implicit or explicit, in favor of or against the other party. Also, no oral discussions and/or written agreements shall be in place of or supersede written loan agreements executed by your business and accepted by U.S. Bank. Thank you for discussing your financing needs with U.S. Bank. Should you wish us to continue to consider your credit request, you will be responsible for all of U.S. Bank's out-of-pocket expenses related to this financing request. We look forward to the opportunity to consider your credit request. If you have any questions regarding this letter, please contact me at (651) 466-8605. Very truly yours, U.S. BANK NATIONAL ASSOCIATION Herb Neufeld Vice President & Senior Lender Government Banking Division Direct: 651.466.8605 Mobile: 651.233.0589 Fax: 651.466.9810 Herbert.Neufeld(c�USBank.com w .USBank.com CITY OF YAKI , WASHINGTON LIMITED TAX GENERAL OBLIGATION BOND, 2013 - $5,000,000 Bond Dated: June 10, 2013 Opinion Dated: June 10, 2013 PACIFICA LAW GROUP LLP 1191 2nd Avenue, Suite 2100 Seattle, Washington 98101-2945 CITY OF YAKIMA, WASHINGTON LIMITED TAX GENERAL OBLIGATION BOND, 2013 $5,000,000 RECORD OF PROCEEDINGS Organizational Documents 1. Certificate for Transcript 2. Certificate of the Yakima County Auditor stating the names and terms of office of the present Mayor and members of the City Council 3. Certificate of the Mayor stating the names of the City Manager, the Director of Finance and Budget and City Clerk 4. Certified copy of proceedings of the City Council last fixing the time, date and place of regular meetings of the City Council 5. Certificate of the City Clerk stating the official newspaper of the City 6. Certificate of the Yakima County Assessor regarding assessed valuation 7. Certificate of the Director of Finance and Budget as to the outstanding indebtedness of the City, including any lease -purchase or conditional sale contracts and any general obligation debt 8. Bond Counsel's Calculation of Debt Limit Authorization of Bond 9. Certified copy of Ordinance No. 2013-017 passed on May 7, 2013 (the "Bond Ordinance") 10. Certified copy of the minutes of the meeting of the City Council held on May 7, 2013, showing passage and adoption of the Bond Ordinance 11. Affidavit of publishing a summary of the Bond Ordinance 12. Fixed Rate Lock Indemnity Agreement Closing Documents 13. Signature Identification and Nonlitigation Certificate 14. Certificates of Manual Signature with Certificate of Mailing to the Secretary of State's Office 15. Federal Tax Certificate; Certificate of the Purchaser and Financing Schedules 16. Copy of IRS Form 8038-G with affidavit of mailing 17. Copy of the Proposal from U.S. Bank National Association 18. Certificate of Investigation by Purchaser at Private Sale 19. Receipt for Bond 20. Certificate of Delivery of Bond 21. Bond Form 101 22. Specimen Bond Opinion 23. Final approving legal opinion of Pacifica Law Group LLP CERTIFICATE FOR TRANSCRIPT I, SONYA CL TEE, the duly qualified City Clerk of the City of Yakima, Washington (the "City"), DO HEREBY CERTIFY that the within and attached documents are in each case true and correct copies of the originals of such documents and that none of the resolutions, ordinances, proceedings, statements or certificates contained herein have been repealed, rescinded or canceled and all of the officers last certified as holding City offices have continued to hold their respective offices from such date to and including the date of this certificate. Dated this 10th day of June, 2013. Sonya aar Tee, City of Yakima, Yakima County Elections Division Certificate of Incumbency I, CORKY MATTINGLY, County Auditor, Yakima County, Washington, do hereby certify that according to records on file in my office, the following individuals are currently serving as councilmembers for the City of Yakima, Yakima County, Washington. Councilmember Term of Office Maureen S. Adkison 1/2012 — 12/2015 Sara Bristol 1/2012 — 12/2015 Rick Ensey 1/2012 — 12/2015 Kathy Coffey 1/2012 — 12/2015 Dave Ettl 1/2010 — 12/2013 Micah D. Cawley 1/2010 — 12/2013 Bill Lover 1/2010 — 12/2013 DATED this 28th day of May, 2013. CORKY MATTINGLY, Yakima County Auditor and Ex -officio Supervisor of Elections Yakima County, Washington CERTIFICATE I, MICAH CAWLEY, Mayor of the City of Yakima, Washington, do hereby certify that Tony O'Rourke is the duly appointed City Manager, Cindy Epperson is the duly appointed Director of Finance and Budget, and Sonya Claar Tee is the duly appointed City Clerk of the City of Yakima. Dated this 10th day of June, 2013. 'ca aw y, Mayor City of Yakim , Washington CERTIFICATE I, SONYA CL A R IEE, the duly qualified City Clerk of the City of Yakima, Washington, do hereby certify that the attached is a true and correct copy of the proceedings of the City Council establishing the date, time and place for regular meetings of the City Council. Dated this 10th day of June, 2013. Sonya ar Tee, C City of Yakima, Wa Print Preview Page 1 of 1 Sections: 1.06.010 1.06.020 1.06.030 Chapter 1.06 MEETINGS OF CITY COUNCIL* Meetings of the city council. Holidays. Special meetings. * See Charter Article II, Section 5. 1.06.010 Meetings of the city council. A. Day and Hour. Commencing on March 21, 2006, regular meetings of the city council shall be held on the first and third Tuesdays of each month. The meetings shall convene at the hour of five p.m. for executive session and at six p.m. for public business items, or at such other time occasionally designated by the city council. B. Place of Meetings. The regular city council meetings shall be held at Yakima City Hall, or at such other place designated by the city council from time to time. (Ord. 2006- 03 § 1, 2006: Ord. 2886 § 1, 1985: Ord. 2702 § 1, 1983: Ord. 2624 § 1, 1982: Ord. 2587 § 1, 1982: Ord. 2382 § 1, 1980: Ord. 2292 § 1, 1979: Ord. 1490 § 1, 1973: Ord. 388 § 1, 1962: Ord. 285, 1961: Ord. 29: Ord. 5 § 1, 1959). 1.06.020 Holidays. When the date of such regular meeting occurs on a legal holiday, then such regular meeting shall be held on the day following. (Ord. 5 § 2, 1959). 1.06.030 Special meetings. Special meetings may be called at such times and in such manner as is provided by law and the City Charter. (Ord. 5 § 3, 1959). http://www.codepublishing.corn/WA/yakimakgi/menuCompile.pl 9/27/2013 I, SONYA C CERTIFICATE R TEE, the duly qualified City Clerk of the City of Yakima, Washington (the "City"), do hereby certify that The Yakima Herald -Republic is the official newspaper of the City. Dated this 10th day of June, 2013. Sonya aar Tee, City of akima, CERTIFICATE OF ASSESSED VALUATION I, Dave Cook, as Assessor of Yakima County, Washington, HEREBY CERTIFY that the value of taxable property within the City of Yakima, Yakima County, Washington, for purpose of 2012 Assessed Valuation for 2013 tax purposes of all the property, including timber assessed value and senior citizen exempted property is $5,494,497,093. Dated as of May 28, 2013. MA CO TY, AS 1 GTON Dave Cook Yakima County Assessor CERTIFICATE REGARDING OUTSTANDING NON -VOTED DEBT 1, CINDY EPPERSON, Director of Finance and Budget of the City of Yakima, Washington (the "City"), do hereby certify that the following are all of the City's c ently outstanding general obligation bonds and long-te leases and financing contracts as of J e 10, 2013 (excluding the City's Limited Tax General Obligation Bond, 2013 issued on the date hereof): Voted General Obligation Bonds: Designation UTGO Refunding Bonds, 2004 Outstanding Balance $ 560,000 Nonvoted General Obligation Bonds: Designation LTGO Bonds, 2003 Series A LTGO Bonds, 2003 Series B LTGO Refunding Bonds, 2004 LTGO Bonds, 2005 LTGO & Refunding Bonds, 2007 LTGO Bonds, 2008 LTGO Bonds, 2009 Series A LTGO Bonds, 2009 Series B Outstanding Balance $ 841,654 500,000 2,500,000 260,000 6,395,000 2,560,000 1,325,000 4,980,000 Long-term leases and conditional sale contracts (including COPs) and other debt: Designation Lease Purchase Agreements Certificates of Participation Dated as of this 10th day of J e, 2013. Outstanding Balance $ 29,041 472,526 Cindy Epperson, Director of Finance and Budget City of Yakima, Washington BOND COUNSEL'S CALCULATION OF DEBT LIMIT Value of Taxable Property within the City of Yakima, Yakima County, as set in 2012 for purposes of 2013 regular and excess levies, per certificate of the Yakima County Assessor: 5,494,497,093 Nonvoted Limited Indebtedness: Nonvoted Debt Ceiling per RCW 39.36.020: 1.50% of value of taxable property 82,417,456 Less: Nonvoted debt outstanding per Certificate of the Director of Finance and Budget (19,361,654) Leases/Sale Contracts (501,567) Proposed Limited Tax General Obligation Bond, 2013 $ (5,000,000) Total Nonvoted Debt $ (24,863,221) Remaining Nonvoted Debt Capacity $ 57,554,235 Total Debt Ceiling for General Municipal Purposes, Voted and Nonvoted: 2.50% value of taxable property (RCW 39.36.020) 137,362,427 Less: Voted Debt Outstanding per Certificate of the Director of Finance and Budget (560,000) Nonvoted debt from above $ (24,863,221) Total Debt $ (25,423,221) Remaining Debt Capacity Unused: $ 111,939,206 Based upon the certificate of assessed valuation of the Yakima County Assessor and the certificate of general obligation debt outstanding as of June 10, 2013 of the City, the issuance of the Limited Tax General Obligation Bond, 2013 by the City of Yakima, Washington, will be within the constitutional and statutory limits for nonvoted, voted and total indebtedness. Dated as of this 10th day of June, 2013. PACIFICA LAW GROUP LLP .!.0% By a Gregory CITY OF YAKIMA, WASHINGTON ORDIN CE NO. 2013-017 AN ORDIN CE OF THE CITY COUNCIL OF THE CITY OF Y *__ __ , WAS GTON, AUTHO ING THE ISSU CE SALE OF A LIMITED T GENE * OBLIGATION BO OF THE CITY IN THE P CIPAL AMO T OF NOT TO EXCEED $5,000,000 FOR THE PURPOSE OF FIN CING COSTS OF S ET ROVEMENTS IN THE CITY; PROVIDING THE FO OF THE BOND; AND AUTHORIZING THE SALE OF THE BOND TO U.S. BK NATIONAL ASSOCIATION. Passed May 7, 2013 PREP D BY: PACIFICA LAW GROUP LLP Seattle, Washington CITY OF YAKI ORDIN CE NO. 2013-0 7 TABLE OF CONTENTS* Page Section 1. Definitions and Interpretation nfIeoms-------_----__---'--.'..-..--..2 Section 2. Authorization of the Prmj ect-----_--__---_---.-----_--__--_--'4 Section 3. Authorization ufthe Bond --_--__--_--__--_.---_----_--_----4 Section 4. Registration, and Payments__ ---_--_----__---__--__.--5 Section 5. ForozofBond —__-__--_-_---_----_--_---------_-----_.--6 Section 6. Execution ofBond —_----_-_--_--___--_-----_--_—_---__.--g Section 7. Application of Bond Proceeds ...............................................................................10 Section 8. Section 9. Pledge ofF ds and General —_----__------_--_-_}l Section 10. ��nOf .--__--.--__--_--_--_--_----_----_--_--]] Section 11. Sale ofthe Bond ._..-._.—_.--_-----_--__----_--_.-__---_--}4 Section 12. Ongoing Disclosure; Covenants ............................................................................14 Section 13. Lost, Stolen or Destroyed BOnd__-----_---_-----_--.--_--_---l5 Section 14.Severability;�l��Oo ]5 --_--_--_--__--_----_---_—_---__— Seo1i»ol5' Effective Date ofOrdinance ..--..--._,-_--__------_--.---_--__—]6 Exhibit A: Proposal * This Table of Contents is provided for convenience only and is not a part of this ordinance. AN ORDIN CITY OF Y MA, WASHINGTON ORDIN • CE NO. 2013-017 CE OF THE CITY COUNCIL OF THE CITY OF Y • • WASHINGTON, AUTHO SALE OF A LIMITED T BOND OF THE CITY IN THE P TO EXCEED $5,000,000 FOR THE P ''OSE OF FIN COSTS OF S " ET 'ROVEMENTS IN THE CITY; PROVIDING THE FO ' OF THE BOND; AND AUTHORIZING THE SALE OF THE BO 1 TO U.S. B NATIONAL ASSOCIATION. rNG THE ISSU • CE GENERAL OBLIGATION CIPAL• 0 T OF NOT LING REAS, the City Council (the "Co cil") of the City of Yakima, Washington (the "City"), has deemed it in the best interest of the City and its citizens that the City make ce street improvements in the City (the "Project"); and REAS, the City is authorized by chapters 35.22 and 39.46 RCW to issue 1 • ed tax general obligation bonds to pay costs of the Project; and REAS, the City has received the offer of U.S. Bank National Association (the "Bank") set forth in Exhibit A attached hereto (the "Proposal"), to purchase a F *ted tax general obligation bond of the City in the principal . ount of not to exceed $5,000,000 (the "Bond") for the purpose of financing the Project; and EREAS, it is deemed necessary and advisable that the City accept the Bank's offer and issue the Bond as set forth herein; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF Y WAS GTON, DOES ORD • AS FOLLOWS: Section 1. Definitions and Interpretation of Terms. (a) Definitions. As used in this ordinance, the following words shall have the following meanings: Bank means U.S. Bank National Association. Bond means the Limited Tax General Obligation Bond, 2013 authorized to be issued by the City pu s t to this ordinance. Bond Counsel me. Pacifica Law Group LLP, Seattle, Washington. Bond Fund means the "Bond Redemption Fund" authorized to be created purs .t to Section 9 of this ordinance. Bond Register means the registration records for the Bond maintained by the Bond Registrar. Bond Registrar means the Director of Finance and Budget of the City, whose duties include registering and authenticating the Bond, maintaining the Bond Register, transferring o ership of the Bond, and paying the principal of and interest on the Bond. City means the City of Y. a, Washington, a m cipal corporation duly org existing der the laws of the State of Washington. City Council or Council • zed and s the City Council of the City as the general legislative authority of the City, as the s. e shall be duly and regularly constituted from time to time. City Manager means the City Manager, or the successor of such office. Code me. the Internal Revenue Code of 1986, as . ended, and shall include all applicable regulations and rulings relating thereto. Default Interest Rate means the Interest Rate plus 2%. -2- 05/03/13 Director of Finance and Budget means the Director of Finance and Budget of the City, or the successor of such office. Interest Rate means a fixed rate of interest determined purs t to Section 11 of this ordinance as the s. e may be adjusted pursuant to the Proposal and set forth herein. Prepayment Fee means the fee dete 'fled pursuant to Section 10 of this ordinance. Project means the project described in Section 2 of this ordinance. Project Fund means the "Project Fund" authorized to be created pursuant to Section 7 of this ordinance. Proposal means the proposal letter submitted by the Bank substantially in the form hed hereto as Exhibit A. Registered Owner means the person in whose n. e the Bond is registered on the Bond Register. Reset Date means each five year. iversary from the dated date of the Bond. Rule me. the Securities and Exchange Co ission's Rule 15c2-12 der the Sec ties Exchange Act of 1934, as the s. e may be • ended from t e to time. (b) Interpretation. In this ordinance, unless the context otherwise requires: (1) The te s "hereby," "hereof," "hereto," "herein," "here der" and any similar te s, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the te "hereafter" shall mean after, and the te "heretofore" shall mean before, the date of this ordinance; (2) Words of the masculine gender shall mean and include correlative words of the fe *nine and neutral genders and words importing the singular n ber shall mean and include the plural n ber and vice versa; -3- 05)03/13 (3) Words importing persons shall include fi s, associations, p erships (including F ited p. erships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (4) Any headings preceding the text of the several articles and sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; and (5) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof. Section 2. Authorization of the Project. The Bond is being issued to finance the costs of cert street and road improvements in the City (the "Project"). Section 3. Authorization of the Bond. For the purpose of financing costs of the Project and paying costs of iss . ce for the Bond, the City hereby authorizes the issuance and sale of its limited tax general obligation bond in the principal . ount of not to exceed $5,000,000. The bond shall be designated the "City of Y. a, Washington, Limited Tax General Obligation Bond, 2013," or other such desi .tion as set forth in the Bond and approved by the Director of F. ce and Budget The Bond shall be dated as of its date of delivery, shall be fully registered as to both principal and interest, shall be in one denomination, and shall mature five years from its dated date; provided, however, p cipal shall be ortized over a period not to exceed 15 years, as set forth in the Bond. The Bond shall bear interest from its dated date or the most recent date to which interest has been paid at the Interest Rate, as the s e ay be adjusted pursuant to the Proposal and set forth herein. Interest on the principal . ount of the Bond shall be calculated -4- 05/03/13 per. on a 30/360 basis, or as otherwise provided in the Bond. Principal of and interest on the Bond shall be payable monthly as set forth in the payment schedule attached to the Bond. At the option of the Bank and with the consent of the City Council, the term of the Bond may be extended on each five year . versary of its dated date (each, a "Reset Date") for up to two additional five year te s, resulting in a final ma ty of no later fifteen years from the dated date of the Bond. Under the terms of the Proposal, the Bank is required to provide the City at least 180 days' notice of its intent to extend the term of the Bond. If the Bank offers to extend the te • of the Bond, and the City Council dete ines that it is in the best interest of the City to approve such extension, the City Co cil shall authorize the extension by the adoption of a new ordinance or an 41 endatory ordinance establishing the te s and conditions, including any adjustment to the Interest Rate, for such extension. If the Bank has not offered to extend the te of the Bond, or if the City has dete ined that it is in the best interest of the City to prepay and redeem the Bond as provided in Section 10 hereof, all principal on the Bond, plus accrued interest, shall become due and payable on the Reset Date. Section 4. Registration, Exchange and Payments. (a) Registrar/Bond Registrar. The Director of Finance and Budget shall act as Bond Registrar. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the Bond if transferred or exchanged in accordance with the provisions of the Bond and this ordinance and to c out all of the Bond Registrar's powers and duties under this ordinance. (b) Registered Ownership. The City and the Bond Registrar may deem and treat the Registered 0 er of the Bond as the absolute owner for all purposes, and neither the City nor the Bond Regis . shall be affected by any notice to the contrary. Payment of the Bond shall be made only as described in subsection (e) below. All such payments made as described in 05/03/13 subsection (e) below shall be valid and shall satisfy the liability of he City upon the Bond to the extent of the o t so paid. (c) No Transfer or Exchange of Registered Ownership. The Bond shall not be transferrable without the consent of the City unless (i) the Bank's corporate n e is changed and the transfer is necessary to reflect such change; or (ii) the transferee is a successor in interest of the Bank by means of a corporate merger, an exchange of stock, or a sale of assets. (d) Registration Covenant. The City covenants that, until the Bond has been surrendered and canceled, it will maintain a system for recording the ownership of the Bond that complies with the provisions of Section 149 of the Code. (e) Place and Medium of Payment. Both principal of and interest on the Bond shall be payable in la money of the United States of A erica. Principal and interest on the Bond shall be payable by check, w ant, ACH transfer or by other means mutually acceptable to the Bank and the City. Upon final payment of principal and interest of the Bond, the Registered 0 er shall s ender the Bond for cancellation at the office of the Bond Registrar in accordance with this Section 4 and Section 13. Section 5. Fo of Bond. The Bond shall be in substantially the following form: TED STATES OF RICA NO. R-1 STATE OF WASHINGTON CITY OF Y LIMITED T - GENE INTEREST RATE: TY DATE: OBLIGATION BOND, 2013 , 2018 REGISTERED 0 ER: U.S. BA NATIONAL ASSOCIATION P' CIPAL 0 T: MILLION D NO/100 DOLL S The City of Y. a, Washington, a m cipal corporation org. zed and existing der and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to -6- 05/03(13 owe and for value received promises to pay to the Registered Owner identified above, on or before the Ma •ty Date identified above, the Principal A ount identified above. This bond shall bear interest at the fixed rate stated above (the "Interest Rate"). Interest on this bond shall accrue from its dated date until paid and shall be computed per . on the principal . o t outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be payable monthly on the dates set forth in the payment schedule attached hereto. The Maturity Date of this bond may be extended at the option of U.S. Bank National Association and with the consent of the City, as provided in the hereinafter defmed Bond Ordinance. Both p cipal of and interest on this bond shall be payable in la 1 money of the United States of erica. Principal and interest on this bond shall be payable by check or w. ant or by other means mutually acceptable to the Registered Owner and the City. Upon fmal payment of principal and interest of this bond, the Registered Owner shall s ender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. of the City (the "Bond Ordinance"). This bond is issued purs t to the Bond Ordinance, to finance the costs of certain street improvements and to pay costs of iss ce. Capitalized terms used in this bond have the me. gs given such te s in the Bond Ordinance. The City may prepay this bond as provided in the Bond Ordinance. Any such prepayment may be subject to a Prepayment Fee. This bond has been designated by the City as a "qualified tax-exempt obligation" within the me. g of Section 265(b) of the Code. The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the "Bond Redemption Fund" (the "Bond Fund"). The Bond Fund shall be dra upon for the sole purpose of paying the p • cipal of and interest on this bond. The City hereby irrevocably covenants and agrees with the o er of this bond that it will include in its . iial budget and levy taxes . ually, within and as a part of the tax levy pe "tted to the City without a vote of the electorate, upon all the property subject to taxation in ounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the s. e shall become due. The full faith, credit and resources of the City are hereby irrevocably pledged for the . ual levy and collection of such taxes and the prompt payment of such principal and interest. Any proceeds of this bond not expended on the Project or costs of iss ce shall be pledged to payment of this bond and deposited in the Bond F d for such purpose. This bond shall not be valid or become obligatory for any purpose or be entitled to any sec ty or benefit der the Bond Ordinance til the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued purs t to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. -7- 05/03113 It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and perfo ed precedent to and in the iss ce of this bond exist, have happened, been done and performed and that the iss ce of this bond does not violate any constitutional, statutory or other limitation upon the . ount of bonded indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Yakima, Washington, has caused this bond to be executed by the manual or facs. 'le signature of the Mayor of the City Co cil and attested by the manual or facs. ile signature of the Clerk, as of this 7th day of May, 2013. [SEAL] CITY OF Y By AS GTON TION CERTIFICATE This bond is registered in the n. e of the Registered Owner on the books of the City, in the office of the Director of Finance and Budget of the City (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City from the Bond Fund. Date of Registration N. e and Address of Registered Owner , 2013 U.S. Bank National Association Gove ent B. 'ng Division 9th Floor (EP- -S9GB) 101 East 5th Street St. Paul, 1 551011 860 PAY NT SCHEDULE Signature of Bond Registrar Director of Finance and Budget Principal and interest on this bond shall be payable as set forth in the following schedule: -8- D5/03/13 Date Principal Interest Total Payment Section 6. Execution of Bond. The Bond shall be executed on behalf of the City with the manual or facsimile signature of the Mayor, and shall be attested by the manual or facsimile signature of the Clerk. Only such Bond as shall bear thereon a Certificate of Authentication in the fo earlier recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered here der and is entitled to the benefits of this ordinance. In case either of the officers who shall have executed the Bond shall cease to be an officer or officers of the City before the Bond so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the City, such Bond may nevertheless be authenticated, delivered and issued and upon such authentication, delivery and iss ce, shall be as binding upon the City as though those who signed the s e had continued to be such officers of the City. The Bond may also be signed and attested on behalf of the City by such persons who at the date of the actual execution of the Bond, are the proper officers of the City, although at the original date of such Bond any such person shall not have been such officer of the City. -9- 05/03113 Section 7. Application of Bond Proceeds. The City shall establish a fund designated the "Project F d" (the "Project Fund") into which the proceeds of the Bond shall be deposited. Money m the Project F d shall be used to pay the costs of the Project and costs of iss . ce for the Bond. The Director of Finance and Budget may invest money in the Project Fund in legal investments for City funds. E ings on such inves clients shall accrue to the benefit of the Project Fund. Money remaining in the Project Fund after all costs of the Project and costs of iss ce for the Bond have been paid shall be pledged to payment of the Bond and deposited in the Bond F d for such purpose. Section 8. Tax Covenants. The City shall comply with the provisions of this section unless, in the written opinion of Bond Co sel to the City, such compliance is not req ed to main. the exemption of the interest on the Bond from federal income taxation. The City hereby covenants that it will not make any use of the proceeds of sale of the Bond or any other funds of the City which may be deemed to be proceeds of such Bond pursuant to Section 148 of the Code and the applicable regulations there der that will cause the Bond to be an "arbitrage bond" within the me. 'ng of such Section and regulations. The City will comply with the requirements of Section 148 of the Code (or any successor provision thereof applicable to the Bond) and the applicable regulations the Bond. e der throughout the term of the The City er covenants that it will not take any action or permit any action to be taken that would cause the Bond to constitute a "private activity bond" under Section 141 of the Code. The City hereby designates the Bond as a "qualified tax-exempt obligation" wi the e. g of Section 265(b) of the Code. The City reasonably does not expect to issue more than $10,000,000 in qualifying tax-exempt debt d 'ng calendar year 2013. -10- 05/03/13 Section 9. Pledge of Funds and Credit; General Obligation. The City hereby authorizes the creation of a fund to be used for the payment of debt service on the Bond, designated as the "Bond Redemption F d" (the "Bond Fund"). No later . the date each payment of principal of or interest on the Bond becomes due, the City shall trans t sufficient funds, from the Bond Fund or from other legally available sources, to the Bond Registrar for the payment of such principal or interest. Money in the Bond Fund may be invested in legal investments for City funds. The City hereby irrevocably covenants and agrees for as long as the Bond is outstanding and unpaid that each year it will include in its budget and levy an ad valorem tax upon all the property within the City subject to taxation in an ount that will be sufficient, together with other revenues and money of the City legally available for such purposes, to pay the principal of and interest on the Bond when due. The City hereby irrevocably pledges that the ual tax provided for herein to be levied for the payment of such principal and interest shall be within and as a part of the tax levy permitted to cities without a vote of the people, and that a sufficient portion of each . ual levy to be levied and collected by the City prior to the full payment of the principal of and interest on the Bond will be and is hereby irrevocably set aside, pledged and appropriated for the payment of the p cipal of and interest on the Bond. The full faith, credit and resources of the City are hereby irrevocably pledged for the . ual levy and collection of said taxes and for the prompt payment of the principal of and interest on the Bond when due. Section 10. Right of Prepayment. If the Bond is prepaid in accordance with this Section 10, interest shall cease to accrue on the date the Bank receives such prepayment. -11•- 05/03)13 (a) Prepayment on any Reset Date. The Bond may be prepaid, in whole or in part, on any Reset Date without prepayment penalty or fee. (b) Prepayment not on a Reset Date. Except as provided for in Section (a) above, there shall be no prepayments of the Bond, provided that the Bank may consider requests for its consent with respect to prepayment of the Bond, without inc ing an obligation to do so, and the City hereby acknowledges that in the event that such consent is granted, the City shall be required to pay the Bank, upon prepayment of all or part of the principal . ount before final a ty, a fee (the "Prepayment Fee") equal to the maxim of: (1) zero, or (2) that ount, calculated on any prepayment date, which is derived by subtracting: (i) the principal o t of the Bond or portion of the Bond to be prepaid, from (ii) the Net Present Value of the Bond or portion of the Bond to be prepaid on such date of prepayment. For purposes of this section, the following definitions shall apply: "Net Present Value" means the 0 t which is derived by s ing the present values of each prospective payment of principal and interest which, without such full or partial prepayment, could othe ise have been received by the Bank over the shorter of the rema ng contractual life of the Bond or next repricing date if the Bank had instead initially invested the Bond proceeds at the Initial Money Market Rate. The individual disco t rate used to present value each prospective payment of interest and/or principal shall be the Money Market Rate at Prepayment for the ma ty matching that of each specific payment of principal and/or interest. "Initial Money Market Rate" means the rate per , dete ined solely by the Bank, on the first day of the te of the Bond or as mutually agreed upon by the City and the Bank, as the rate at which the Bank would be able to borrow funds in Money Markets for the . ount of the Bond and with an interest payment frequency and principal repayment schedule equal to the -12- 05/03/13 Bond and for a te as may be. anged and agreed upon by the City and the Bank. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. The City hereby acknowledges that the Bank is under no obligation to actually purchase and/or match funds for the Initial Money Market Rate of the Bond. "Money Market Rate at Prepayment" means that zero-coupon rate, calculated on the date of prepayment, and dete ined solely by the Bank, as the rate in which the Bank would be able to borrow funds in Money Markets for the prepayment . ount matching the maturity of a specific prospective Bond payment or repricing date. Such a rate shall include FDIC insurance, reserve requirements and other explicit or implicit costs levied by any regulatory agency. A separate Money Market Rate at Prepayment will be calculated for each prospective interest and/or principal payment date. "Money Markets" means one or more wholesale funding mechanisms available to the Bank, including negotiable certificates of deposit, eurodollar deposits, bank notes, fed funds, interest rate swaps, or others. In calculating the . ount of such a prepayment fee, the City hereby authorizes the Bank to make such ass ptions regarding the source of funding, redeployment of funds and other related matters, as the Bank may deem appropriate. If the City fails to pay any Prepayment Fee when due, the o t of such Prepayment Fee shall thereafter bear interest until paid at the Default Interest Rate (computed on the basis of a 360 -day year, actual days elapsed). Any prepayment of principal shall be accomp. 'ed by a payment of interest accrued to date thereon; and said prepayment shall be applied to the principal installments in the inverse order of their a ties. All prepayments shall be in entire principal balance of the Bond. -13- of at least $100,000 or if less, the re 05/03/13 Section 11. Sale of the Bond. The Bond shall be sold to the Bank pursuant to the te s of this ordinance and the Bank's Proposal. The City hereby accepts the Bank's Proposal, which is attached as Exhibit A. The City Manager is hereby authorized to approve the Interest Rate and the principal ount of the Bond and to agree to any other terms, conditions and covenants that are in the best interest of the City and in accordance with the Bank's Proposal so long as (a) the principal . o t of the Bond does not exceed $5,000,000, and (b) the Interest Rate for the Bond does not exceed 2.25%. The appropriate City officials, including but not limited to the City Manager and the Director of F ce d Budget, are hereby authorized and directed to do eve g necessary for the prompt iss ce, execution and delivery of the Bond and for the proper application and use of the proceeds thereof. Section 12. Ongoing Disclosure; Covenants. (a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements of the Rule. (b) Covenants. So long as the Bond is outstanding, the City hereby covenants and agrees as follows: (1) To maintain rates, fees and revenues of the City at least equal to 1.00 times the nal debt service on all limited tax general obligation debt of the City, including the Bond. Failure to maintain such ratio for two consecutive years will result in an automatic adjustment of the Interest Rate to the Default Interest Rate; (2) To provide the Bank copies of the City's audited fi• c.al statements within 330 days of the end of each fiscal year; and -14- 05103/13 (3) financial or other info ation as may be reasonably requested from time to time. Section 13. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or destroyed while in the Registered 0 er's possession, the Bond Registrar may at the request of the Registered 0 er execute and deliver a new Bond of like date, number and tenor to the Registered Owner thereof upon the Registered Owner's paying the expenses and charges of the City and the Bond Registrar in connection therewith and upon its filing with the City written certification that such Bond was actually lost, stolen or destroyed and of its o ership thereof. In the case the Bond shall be lost, stolen, or destroyed while in the Registered 0 er's possession, the Registered 0 er may elect upon final payment of principal and interest of the Bond to s ender a photocopy of the Bond for cancellation at the office of the Bond Registrar together with written certification that such Bond was ac ly lost, stolen or destroyed and of its o ership thereof. Section 14. Severability; Ratification. If any one or more of the covenants or agreements provided in this ordinance to be perfo ed on the part of the City shall be declared by any court of competent j -sdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the rem. ng cove . ts and agreements of this ordinance and shall in no way affect the validity of the other provisions of this ordinance or of the Bond. All acts taken pursuant to the authority granted in this ordinance but prior to its effective date are hereby ratified and co ed. -15- 05/03/13 Section 15. Effective Date of Ordinance. This ordinance shall be effective after its passage as provided by law. ADOPTED by the City Council of the City of Yakima, Washington, at a regular meeting thereof held this 7th day of May, 2013. ATTEST/AUTHENTICATED: CITY OF Y WASHINGTON Micah Cawley, a o Sonya C Tee, City Clerk Approved as to fo ego , Paci Group LLP Filed with the City Clerk: Passed by the City Council: May 7, 2013 Ordinance No. 2013-017 Date of Publication: May 10, 2013 Effective Date: J e 9, 2013 -16- C5,03/13 Exhibit A Bank's Proposal (a . hed) 05/03/13 Mbank. Herbert F. Neufeld Vice President & Community Banking Credit Liaison U.S. Bank National Association Govemment Banking Division 9th Floor (EP-MN-S9GB) 101 East 5th Street St, Paul, MN 55101-1860 April 26, 2013 Tara L is, CPA Financial Services Manager City of Yakima 129 N. Second St. Yakima, WA 98901 Re: $5 million paving financing U.S. Bank National Association ("U.S. Bank") is pleased to consider your request to provide financing to the City of Yakima, Washington ("City"). A summary of some of the terms U.S. Bank is considering for this financing package is as follows: Re: $5 Million City of Yakima, Washington Non -voted General Obligation Bond ("Bond") The Bond financing to the City, is for the permanent financing for City pave nt improvements. Fixed Rate Bond: Amount: $5 Million Length: 5 years (15 -year amortization) Rate Reset: Each 5th year anniversary (not less than 180 days notice to the City). Put Option: U.S. Bank retains the right to put the loan back to City each 5th year. There can be no automatic extension. Interest Rate Features: All rates are subject to change with market conditions until formally locked by an agree nt between the City and U.S. Bank. All rates assume a 301360 -day interest ac al basis. All rates assume that the City and legal counsel will designate the Bond as tax-exempt (bank qualified) under existing federal tax regulations. Interest Rates: A fixed rate, based upon an indicative rate of 1.67% per annum as of April 26, 2013, such rate to be adjusted as of the date of funding so as to maintain the same margin over U.S. Bank's cost of funds as that which is included in the above indicative rate. The rate will be reset each 5th anniversary for the duration of the Bond. Payments: Rate, above, assumes monthly interest arid monthly principal payments that result in, essentially, level annual debt service requirements over the 15 -year amortization period. Prepayments: Prepayment is aIIo d, in whole or in part, an ariy rate reset date without prepayment fee. Othe se, prepayment of the Bond is not expected. Ho ver, prepayments may baeUm*v=dbyU.G. Bank on other than a rate reset date but will be subject to U.S. Bank's standard breakfunding prepayment provisions. Prepayments allowed by U.S. Bank may, thmnohmre, incur a prepayment fee if the future market (at the time of prepayment) is one of lower interest rates than the market s at the original closing date. U.S. Bank's standard "breakfunding" prepayment Ianguage will be provided to legal counsel for inclusion in the documents. Put Option: U.S. Bank has the option to "put" the loan back 10 the City should it decide not to offer a 5 -year maturity extension or if the City and U.S. Bank cannot agree on a new interest rate orother bond provisions for the next 5year period. US. Bankwill provide 180 days notice should it clecide to not extend the loan for ari additional 5 yearterm. Should U.S. Bank and the City not mutually agree on a new interest rale and/or changes to the payment or structure provisicns or if the Bank fails to reset the rate, the loan will mature in the 5th year. Default Iriterest Rate: The default interest rate will be the stated rate plus 2%. Securitv: The Bond will be a non -voted general obligation af the City. U.S. Bank will not take a subordinate lien position or be in a less than senior level position to any other financing. Bond Counsel: The loan documents and an unqualified legal opinion must be provided by a nationally recognized bond counsel that is currently listed in the "Red Book" more formally kno as the Bond Buyer's Municipal Markelplace ('Bond Counsel").The Pacifica Law Group is acceptable to U.S Bank 10 perform as Bond Caunsel. Costs: Vanous costs, expenses and fees relating to due diligence and Bond documentation, including all legal fees and expenses are the responsibility of the City. U.S. Bank will not charge its customary $5,000 set-up fee. U.S. Bank does not expect to require separate Bank Counsel for this financing and will be permitted to rely on the documents and legal opinion of the City's Bond Counsel. Covenants: The City will covenant to maintain rates, fees, and revenues to result in a minimum debt service coverage (funds available for debt service divided by the amount of debt service) of 1.00 times. Failure to maintain this coverage ratio for 2 consecutive years will result in an automatic adjustment of the interest rate to (he Default Iriterest Rate. The City will covenant to automatically provide the Govemment Banking Division of U.S. Bank with copies of its annual, audited financial statements within 330 days of the end of each fiscal year for the duration ofthe Bond. Other: U.S. Bank's continued involvement with this financing is predicated upon U.S. Bank obtaining credit approval of the various terms, conditions, and creditworthiness of the City. The credit approval process includes the mandatory analysis of the City's most recent three years of audited financlal statements. We hereby acknowledge our possession of those audited financial statements. Documentation will include standard covenants regarding maintenance of business operations, adequate insurance coverage, agreement to take all actions necessary to preserve tax-exempt status of the obligation, and to coluect fees, taxes and other revenues in an amount sufficient to meet all City obUgationm, including debt service on this Bond. All funds transfers must be directly deposited to a U.S. Bank account. Documentation for the transaction will be prepared by Bond Counsel and will include an appropriate authorizing resolution or ordinance, 8038 filing, and Bond Counsel opinion that the Bond is a legal, valid, binding, enforceable and properly authorized obligation of the City. The City will designate the Bond as a "tax-exempt, bank qualified obligation" under section 265(b) of the Internal Revenue Code of 1986, as amended, for investment by financial institutions. As obtain more information, additional substantive conditions will be required and terms may be changed or be supplemented. In addition, upon completion of our analysis and due diligence and if obtain credit approval of this proposal, Bond Counsel will prepare loan documentation which will include terms and conditions customary to U.S. Bank, as 11 as warranties and covenants specific to this transaction. To that end, this letter is an expression of interest only, and it is not a contract, commitment nor intent to be bound. U.S. Bank does not intend that this letter or discussions relative to the terms of this letter create any legal rights or obligations, implicit or explicit, in favor of or against the other party. Also, no oral discussions and/or written agree nts shall be in place of or supersede written loan agreements executed by your business and accepted by U.S. Bank. Thank you for discussing your financing needs with U.S. Bank. Should you wish us to continue to consider your credit request, you will be responsible for all of U.S. Bank's out-of-pocket expenses related to this financing request. We look fo rd to the opportunity to consider your credit request. If you have any questions regarding this letter, please contact me at (651) 466-8605. Very truly yours, U.S. BANK NATIONAL ASSOCIATION b- N Herb Neufeld Vice President & Senior Lender Govemment Banking Division Direct: 651.466.8605 Mobile: 651.233.0589 Fax: 651.466.9810 Herbert.NeuteldAUSBank.com .USBank.com I, SONYA C • 1, CERTIFICATE TEE, the duly qualified City Clerk of the City of Yakima, Washington (the "City"), do hereby certify that the attached is a full, true and correct copy of the minutes of the May 7, 2013 meeting of the City Council which reflects the passage of Ordinance No. 2013-017. Dated this 10th day ofJune, 2013. NNN% 4 0'1 .4: YAKIMA CITY COUNCIL May 7, 2013 Council Chambers -- City Hall 5:30 PM Executive Session; 6 PM Business Meeting; 7 PM Public Hearing MINUTES 114. Back Pal Print EXECUTIVE SESSION 1. Roll Call Council: Mayor Micah Cawley, presiding, Assistant Mayor Maureen Adkison, Council Members Sara Bristol, Kathy Coffey, Rick Ensey, Dave Ettl and Bill Lover 2. Executive Session regarding pending litigation Executive Session was held and adjourned at 5:56 p.m. BUSINESS MEETING 1. Roll Call Council: Mayor Micah Cawley, presiding, Assistant Mayor Maureen Adkison, Council Members Sara Bristol, Kathy Coffey, Rick Ensey, Dave Ettl and Bill Lover Staff: City Manager O'Rourke, City Attorney Cutter and City Clerk Claar Tee 2. Pledge of Allegiance Mayor Cawley led the Pledge of Allegiance. 3. Open Discussions for the Good of the Order A. Proclamations i. Proclamation of appreciation for Donna Moultray Mayor Cawley read a proclamation of appreciation for Donna Moultray. Ms. Moultray accepted the proclamation and thanked Council for her long partnership with the City of Yakima. ii, National Peace Officers Memorial Day Mayor Cawley proclaimed May 15, 2013 as National Peace Officers Memorial Day. Chief Rizzi thanked Council and introduced Officer Adams who accepted the proclamation on behalf of the dedicated men and women at the Yakima Police Department. Mayor Cawley invited the public to a Peace Officers event on Wednesday, May 15 at 11:30 at the Yakima Police Department. B. Presentations/recognitions/introductions i. Recognize City/County Purchasing Manager Sue Ownby and Payroll Officer Diane Schmitt for 25 years of service to the City of Yakima Page 1 of 13 Finance and Budget Director Epperson introduced unty Purchasing Manager Sue Ownby and Payroll Officer Diane Schmitt and thanked them for their 25 years of service to the City of Yakima. ii Recognitiono[theEmployee's WelfarBenefit Board, CheCheryl Ann Mattia & Gretchen Peterson -Lee for etablishment of the Mi -care Clinic Mayor me Resource Manager Che I Ann Mattia and the City of Yakima Insurance Board members for their work on the Mi -Care Clinic, which has earned the National Public Employer Labor Relations Association 2013 Pacesetter Award. C. Status reports on prior meeting's citizen service requests |. Code Administration Manager Joe Caruso's response to complaint from Doug Lemon (verbal) Code Administration Manager Caruso spoke in response to a citizen complaint from Doug Lemon at a previous Council meeting. He feels he is speaking for all City empoyees when he says Council meetings are not the right venue for a citizen to complain about City employees. Mayor Cawley sympathized, but believes every citizen has the right to speaon any topic. Council Members Coffey and Bristol feel it is inappropriate to complain about City employees at Council meetings. Council Member EttI noted they have barred other citizens from speaking at Council meetings based on their nd nt untilthavhove apologized. Additionally, the repetitiousamdunfounded complaints undercut legitimate complaints and the proper venue for those type of complaints is with the City Manager. If a citizen is unhappwith the City Manager's response, the complainant can then be directed to the Council. Mayor Cawley noted the Iarge crowd attending and deferred this item to other business. 4. Council Reports i Economic Development Committee Minutes from March 28.2013 Motion: Approve, Moved by Council Member Sara Bristol, Seconded by Councilber Rick Ensey. Carried 7-0. Couricil Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, EttI, Lover. 5. Consent Agenda Mayor Cawley referred to the items placed on the Consent Agenda, questioningwhether there were any additions or deletions from Council members or citizens present. The following items were removed from the consent agende. 6) Resotution approvingAnnendedAoreement with The Watershed Companyforpnofesoinnvd services relating to Shoreline Master program update and support services The City Clerk read the Cont Agenda items, including resolutions and ordinanceby title. (Items on the Consent Agenda are handled under one motion without further discussion— see motion directly below.) Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Assistant Mayor yNoureenAdWaon. Carried 7'0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Enmey.Ett|.Lover. A. Consideration of approval of City Council Meeting Minutes i. Approval of the minutes from the February 5 and 19, March 5 and 19, April 2 and 16, 2013 City Council Business meetings and February 26 and March 36.2O13Study Sessions Page uvv1a The minutes of the February 5 and 19, March 5 and 19, Apr2and 1O.2013City Council Business meetings and February 26 and March 26, 2013 Study Sessions were approved, having been duly certified accurate by two Council members, with no one present wishing to have said minutes read pub|ic|y. B. Resolution authorizing a Lease Agreement with Pacific Meter Services, Inc, for the rental of the Race Street Fire House RESOLUTION NO. R-2013-050, A RESOLUTION authorizing the City manager to execute a lease of the "Race Street Fire House" propertyto Pacific Meter Services, Inc., to facilitate advanced water metering infrastructure installation work C. Resolution authorizing an agreement with Camille Becker to Provide Target Zero Manager Duties to the Washington Traffic Safety Commission through the Yakima Police Department RESOLUTION NO. R-2013-051, A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute awith the CamUIe Becker to provide Target Zero manager duties to the Washington Traffic Safety Commission through the Yakima Police Department D. Resolution authorizing an interlocal agreement with the Yakima School District for continuation of School Resource Officer services for the 2013-2014 school year RESOLUTION NO. R-2013-052, A RESOLUTION authorizing the City Manager af the City of Yakima to execute an Interlocal School Resource Officer Agreement with Yakima School District No. 7 for the continuation of the school resource officer program during the 2013-2014 school year E. Resolution authorizing a Sole Source Procurement with Metrohm USA for the purchase of an lon Chromatographraph System specific in meeting the Regulatory Testing Requirements of the Wastewater Division RESOLUTION NO. R-2013-053, A RESOLUTION authorizing a Sole Source Procuremen between the City of Yakima and Metrohm USA for the purchase of an lon Chromatograph (IC) System specific in meeting the Regulatory Testing Requirements of the Wastewater Division F. Resolution authorizing a Sole Source Procurement with APSCO for the purchase of Wemco Primary Sludge Recirculation Pumps for the Wastewater Division RESOLUTION NO. R-2013-054, A RESOLUTION authorizing a Sole Source Procurement between the City of Yakima and Apsco for the purchase of Wemco Primary Sludge Recirculation Pumps for the Wastewater Division 6. Audience Participation Lonnie Davis, resident of Puyallup, WA, noted the rumors in the paper about Track 29 are not all true. He stated he has found criminal activity on the part of Umpqua Bank and believes they are unethical. He stated they are having a jamboree at Track 29 on Saturday and invited the community to attend, Lynn Kittelson, City residentapologized to Joe Caruso and stated she thinks the actions of the citizen are uncalled for. She invited Council and the community to attend an art show on the North side of 3rd Street & Yakima Avenue on May 12 from 9 a.m. to 3 p.m. Her last issue to discuss is regarding Track 29. She thinks there is something wrong with what is happening there and believes it is a destination Iandmark in Yakima, Jessica Navidad, non resident, and Zach Morehead, City resident, stated they are studying how citizens can participate in their government at Davis High School. They believe there is an overconsumption of plastic shopping baand invited Council and the community to attend their presentation on May 13 from 10:20 to 11:20 at Davis High School. They would like input on what Page 3 of 13 they believe is a local environmental problem. Toriy Sandoval, City resident, stated he is President of the Historic North Yakima group and feels the women business owners have been terrorized at Track 29. He loves Track 29 and referred to a p011 conducted by the Yakima Herald about Track 29. He stated they will tight with everything they have in order to keep Track 29 open. Bill DCity resident, believes Council should consider what Joe Caruso requested. He thanked Joe Caruso, Code Enforcement, ONDS and Refuse for the clean-up pject this past Ben Shoval, non residentstated he is passionate and aggressive and hopes the Council can put that aside as he is one of seven people who volunteered to be on the City's Planning Commission. He believes one of the most important aspects of the Planning Commission is to process and make recommendations to update or improve the Comprehensive Plan. He thinks this drives the economy with jobs and sales tax revenue and that there are many valuable projects which cannot go forwau1. He requested that Council reconsider opening the Comprehensive Plan process for 2013. Tom Durant, non residentowner of a business inside the City limits, reported he is a land use consultant and echoed Mr. Shoval's request. Sandy Belzer Brendale, unknown residency, asked if the City has an ordinance that opens the Comprehensive Plan process each year. She invited Council and the community to attend a Yakima County Republic Liberty Caucus hearing with KrisAnne Hall on May 16, 2013 at Howard Johnson Plaza. Craig Naches resident, owner of the Yakima Sportscenter, reported a challenging issue with their business due to the Cinco de Mayo celebration Saturday night. The entrance to his business was blocked, which shut down his business, as well as the business next to his. He likes the venue; however, he believes it should be arranged differentlin the future, or moved down the road, in order to ensure the downtown businesses don't suffer. PUBLIC HEARINGS 7. Closed record public hearing to consider the Hearing Examiner's recommendation for the denial of a requested rigVacation af N 2nd Avenue requested by Hops Extract Corp. of America City Attorney Cutter advised Council they are entering into a qudicial panel process of a closed record public hearing and it is Council's job to make the ultimate decision. He asked if any Council members have had ex parte communication with either party, and if so, to identify the nature of the contact. Council Member Lover stated he went to the site, found Mr. Hordan was there and they had a conversation about where the boundaries were. Mr. Cutter asked Mr. Lover if this would affect how he decides the issue. Mr. Lover responded it would not. Council Member Coffey stated she received an email from Mr. Buchanan and a phone call from the ¥akima Herald -Republic reporter. Mr. Cutter asked if she made anydecisions based on the email and whether it affected her decision, Ms, Coffey stated it did not, Mr. Cutter asked if the discussion with the reporter changed her decision in any way. Ms. Coffey stated it did not and added that she watched the hearing, which was part of the record. Council Member Bristol noted she also spoke with the Yakima Herald -Republic reporter, and it did not affect her decision. Mr. Cutter asked Council if they had made a pan this issue with respect to the article in the Yakima Herald -Republic. Council unanimously responded no. Page *of 13 Community Development Director Osguthorpe noted this is a requested vacation of property and the Hearing Examiner recommended denial of the application. Mark Fickes, Partner in Halverson Law, spoke on behalf of the applicant, Hops Extract and made the following comments (paraphrased): This is a relatively standard petition, which was reviewed by the City's design team, and the staff report recommended approval. The only thing unusual in this case is the person who opposed the vacation --former Mayor Lynn Buchanan and his friends and family. I am disappointed in the Hearing Examiner's recommendation. The Council has three options: reject the Hearing Examiner's denial and approve the vacation, remand this issue back to the Hearing Examiner for further review, or accept the Hearing Examiner's recommendation. I hope the Council members have an open mind and are doing their job in reviewing the record, which is a quasi-judicial procedural issue. I am disappointed to read the article in the Yakima Herald -Republic stating this request would likely be denied by Council, since it is similar to the one from Roche Fruit a year -and -a -half ago. I believe the only difference between the two requests is that only a few people opposed the Roche Fruit request, whereas former Mayor Lynn Buchanan is now opposing Hops Extract's request. Several Council members and the City Manager have openly questioned why the City is giving away the property at half its value. The answer is simple; it is because Council chose to accept one-half of the appraised value in a 2007 resolution. Therefore, they couldn't pay more for the property if they wanted to. Council chose to do this for economic development purposes. (Mr. Fickes read the agenda statement from the 2007 council agenda then continued his comments). If the current request isn't approved, my client will need to look at other locations to meet long term needs as Yakima is competing with Union Gap, Sunnyside, and Moxee, which are closer to the agriculture base than Yakima. My clients would prefer to stay, but their decision will require a balancing of interest. The Hearing Examiner was fixated on public benefit, and there is benefit in a street vacation petition when the vacated property is put back on the tax rolls, increasing employment by providing safety and efficiency to their operation. This street was closed for six months in 2011 after an explosion at the facility: traffic functioned fine. The Buchanan Warehouse will lose one access point; however, there is plenty of public benefit. (Mr. Fickes again noted the comparisons to the Roche Fruit request, which was approved two years ago, then continued his comments.) This boils down to opposition. Michelson Packaging says they use the road and it's convenient but there are alternative roads available. Mr. Buchanan has the same argument. He believes the Hearing Examiner was wrong. If someone opposes the request, it doesn't mean the Hearing Examiner has to say no. Mr. Buchanan is worried about visibility and trucks using North Second Avenue to back into his warehouse. They are willing to set a non -obscuring fence back 140 feet; however, most of the trucks backing into Buchanan Warehouse use "D" Street. Mr. Buchanan believes the City staff report is sufficient and asks that the Hearing Examiner's decision be rejected. He noted Council Member Bristol referred to a request regarding security measures and stated Hops Extract has never received a formal request from the City about security measures. The answer is this vacation request. Gating the street is the most efficient and cost effective way to secure the Hops Extract facility; customers audit their facilities and need to see a secure area. Dave Dunham, General Manager of Hops Extract, spoke on behalf of their request and made the following comments (paraphrased): I was bom and raised in Yakima and have been employed for 16 years by Hops Extract, a wholly owned subsidiary of S.S. Steiner, which has been in business for 170 years. The primary business of Hops Extract is producing concentrated hop resins, which are harvested for brewers worldwide. We have a 24 -hour -a -day 7 -day -a -week schedule and a good track record of economic growth and development, The vacation of North Second Avenue is very important to us as we have cold storage warehousing on both sides of the street and recently purchased the Washington Fruit building on the west side. We have been dealing with increased security and safety concerns and the guidelines for security are specific. The simple solution, which is the most effective and least expensive, is to install fencing and minimize the number of entrances to non-public areas. I believe we are at a competitive disadvantage with a street running through our property. Without the street vacation, we will consider moving to a centralized area. I feel the use of North Second Avenue for trucks backing into Buchanan's Warehouse are exaggerated as I have not witnessed that in the 16 years I have worked there. Page 5 of 13 Bill Hordan, City resident, stated he prepared and submitted the application on behalf of Hops Extract and made the following comments (paraphrased): As industrial uses continue to grow in this area, known as Fruit Row, there has been a need for Hops Extract to expand; unfortunately, there is little room to grow. Many of the businesses in the area have had to acquire adjoining properties until they owned an entire block, which can make the facilities become disjointed and no longer contiguous to themselves. This makes it difficult to operate because safety, security and efficiency become an issue. This right-of-way vacation can close this gap by creating one large industrial operation that can be adequately secured and efficiently run. This request is being made for the same reasons that Roche Fruit and Washington Fruit requested right-of-ways and is consistent with their two right-of-way vacation applications, which were ultimately approved. It is important to keep the industrial base downtown and do what is necessary to accommodate their needs and protect their investment. This vacation is a pro -economic development tool to encourage growth and retain existing business. Some of this is generated by the Food Modernization Act being pushed by the Federal Government to ensure food is not intentionally contaminated. Food purchasers express the importance of safety and security concerns when they inspect the business operations; this is a trend that will continue. Right-of- way vacations provide the opportunity for the businesses to expand and keep this area viable for industrial users; they also keep the employees safe from persons and vehicles traveling through the middle of their work place. The City has approved vacations for these reasons in this area in the past, and should continue. The City staff was correct when they recommended approval of this project and encouraged Council to do the same. Tyler Hinckley, partner at Montoya Hinckley, spoke on behalf of Lynn Buchanan of Buchanan Warehouse, Ltd. and 115 Trust in opposition of the vacation and made the following comments (paraphrased): This case is extremely important to Buchanan Warehouse and Michelson Packaging, one of the biggest companies in this City. The first and foremost criteria to be met with this application is public benefit. This proposed vacation provides zero public benefit. It is purely to benefit a private company. It has long been required by law in the State of Washington that "the order of vacation must have within it some element of public use." This requested vacation is solely for a private purpose, but being the least expensive and most effective option for Hops Extract does not make it the best option for the citizens of Yakima. The purported public benefits that Hops Extract has claimed in its application --to connect disjointed properties to create a large contiguous property and to expand and protect industrial development in the area- -provides no public benefit. This idea of compliance with the Food Safety Modernization Act is misleading. There is no regulation that requires Hops Extract to fence off North Second Avenue, no regulation or proposed rule or otherwise that would require them to fence off their entire operation. The guidelines on the FDA's website, state they are proposed guidelines and are non- binding recommendations. As an alternative to fencing the property, the FDA states an organization can add a security guard, screen the entrances, hire additional surveillance, conduct security checks, and install security cameras. Another benefit purported by Hops Extract is the protection of food grade products, or food safety. There is nothing in the record and nothing in the application that says that the product currently being processed at Hops Extract is not safe. There is nothing in the record that says there's been any evidence of tampering with their product. Today is the first time we've heard that the inability to expand might quell their hiring of additional employees, but that is not part of the record. It wasn't presented to the Hearing Examiner and should be ignored. The other purported benefit, added after the hearing, was the additional tax revenue. Under that rationale, anytime there is a public right-of-way vacated and placed into private hands, there is an increase in property tax revenue. That, in and of itself, is not sufficient to justify vacation of a public right-of-way and is not consistent with the five criteria set forth by the City, and it is not consistent with state law. Hops Extract has indicated the benefits that allowed the Roche application to carry through were improved public safety and increased production, but the main reason that it passed was probably that there was no substantial opposition. You see the same language in both applications; just because it wasn't strenuously objected to in Roche doesn't mean that is a sufficient reason for finding public benefit. The record shows that if North Second Avenue is vacated, the owners of Buchanan Warehouse expect to lose scale traffic and may be forced to shut down scale operations. If that Page 6 of 13 is the case, there will be no more commercial scales in the City. Trucks will be required to drive to Union Gap on City streets and weigh to make sure they are within the legal limits, causing potential public detriment to City streets. There are only two out of the five criteria that are at issue here. Petitions should be consistent with the Six-yeaTransportation Improvement Pl (TIP) and the Urban Area Comprehensive PIan. Just because the Six-yearear TIP doesn't have planned improvement for North Second Avenue doesn't mean vacating it is consistent with the plan as the plari assumes North Second Avenue will be there. Additionally, in the record is a letter from Mr. Corbin, of Continuous Gutter and Roofing, who says the only way to get a semi- trucko|ooebothevxonahouoeiotnbecknnblthepropedyv|mNnrth8eoondAvenue.Thereiano other record evidence that sait 15 not proper or that trucks don't back from North Second Avenue onto Buchanari Warehouse property. Therefore, the comments made by Counsel and Mr. Dunham today were not part of the record and should be ignored. Mr. VVi|kem, owner of Carpet Pno'm, is in the record as saying he cannot reasonably access Buchanan Warehouse without backing from North Second Avenue onto the Buchanan Warehouse property. Furthermore, if the street is vacated, along the South edge of "D" Street, regardless of how far Hops Extract sets back a fence on North Second Avenue, anybody who travels onto Hops Extract property without permission is trespassing. Mr. Buchanan's clients would be trespassing even with a 100 foot setback, as there is no easement granted to Buchanan Warehouse to use North Second Avenue. Council should follow the recommendation of the Hearing Examiner and deny the petition to vacate North Second Avenue, Lynn Buchanan, City resident, spoke in opposition of the street vacation. He made the following comments (paraphrased): There was an 11 -month closure of North Second Avenue because of the explosion at Hops Extract; hovvever, it wasn't really closed as there were trucks going back and forth. The City spent the taxpayers' money to get a 26 -page report from the Hearing Examiner, and is now conducting its own hearing instead of listening to the person hired. Streets are a circulatory system of a city and are the arteries and the veins that keep a city alive. If you cut off enough streets in a ciit will die as people will only go where they can travel freely. Taxpayers have been paying for North Second Avenue for 128 years. It started out as a dirt road, going through the sage brush from Yakima Avenue to the north edge of "D" Street. Then it went to a gravel road. then a narrow concrete street in the '40m and '50m and finaily to the wide street we have today. The businesses frontinon North Second Avenue used it as access for Fire. Police and other emergency vehicles. | have two sets of pictures of Hops Extract when they emergency havahodonm �orfina; openbothohowNo�hSmcondAvanumvmaomjdeond�h� wehic|eofiUed-"up, oiU'' ingmn�o^OStreet.|fthe street imremoved pubUodomain, there wiU not be room for those vehicles, especially if a fence is there. It will not protect the life and safety aspects of Hops Extract, nor will it protect the life and safety of the businesses that surround that area. Closing this block of North Second Avenue will close one-third of the access points to his business and will also set a precedent for closing North First Avenue and "D" Street, as there are several businesses that own property on both sides of those streets. The City is spending over $40 million on two underpasses because the trains will close "D" Street and other City streets eight hours a day. That is another access to his business. If his scale business drops anymore it will be shut down, which will leave one commercial scale in Union Gap. Review item nine in your packet and see what happens when overloaded trucks use city streets. Go back to some of the pictures submitted in the hearing and see who was pumping out overloaded trucks. Hops Extract trucks frequently weigh in over the 105,000 -pound limit. Mayor Cawley stated they have heard from the petitionermndtheo and opened the closed record public hearing to the public. With no one coming forward, Mayor Cawley closed the hearing. Council Member Bristol asked if the Food Safety Modernization Act is a requirement or a recommendation. Mr. Dunham stated it is a recommendation. City Attorney Cutter stated Council can ask questions as long as they were reflected in the record. Council Member Bristol asked Mr. Fickes about his merriorandum on the argument with public benefit, where he stated the burden is on the challenging party to demonstrate there is a Page 7 of 13 complete lack of public benefit. Mr. Fickes stated (paraphrased): There is very little case Iaw and what little there is indicates there has to be a public benefit. Mr. Fickes disagrees with Mr. Hinckley's n, and thinks if this Counci decided to approve the street vacation petition, there is ample public benefit. Council Member Bristol asked if Mr. Fickes is asking them to interpret the public benefit as being the improved food qualitysecurity at the private facility and the increased property tax that the City would receive. Mr. Fickes said yes, but clarified that he is not saying it is Council's job to determine if it is sufficient. He indicated putting the property back on the tax rolls and not having homaintain itwas asufficient public benafitinanother case, which im|nthe record. Mayor Cawley noted City staif is recommending approvaland the Hearing Examiner is recommending denial, so this will be a tough decision to make, Council Member EttI stated the legislative body still has to follow the rules and the guidelines regardless of whether a vacation is opposed vigorouslyornoLAwmiwtont8eniorAttorneyKunWornotedtheHearingExanninor'o recommendation referred to a number of prior decisions he had rendered in the area of street vacations which were referred to by case number, some of which were upheld and some of which were denied, so the reference is probably to one of those case numbers where the vacation was granted. City Attorney Cutter added his interpretation: while the Hearing Examiner referenced a number of cases in his decision, if he didn't speak to elements of those cases, then the attorney's view of what those elements might have been would be speculative and not part of the record. Mayor Cawley noted they need to render a decision to either accept the HeariExaminer's recommendation, to deny it, or to remand it and ask him to bring it back to us. City Attorney Cutter stated that for a remand Council would need to identify specifically what element of the issue they wanted further information on. Council Member Coffey stated she was feeling olittle conflicted as Mr. Buchanan was her brother-in-law at one time and she thought maybe she should not be involved in this. Mayor Cawley asked if she thought it was affecting her ability to make a fair decision. Council Member Coffey stated no. City Attorney Cutter stated that answers the question. Assistant Mayor Adkison indicated concern that Council is not being consistent as they were with Roche Fruit and Washington Fruit. EftUmxoved and Adkison seconded to rejecthe Hearing Examiners decision and accept the petition to vacate. Council Member Bristol stated she will be votnd believes they shouldmove forward with the Hearing Examiner's decision and doesn't think the threshold for public benefit has been met. Council Member Lover stated this isn't black and white; howeverthe safetand effiit him and he understands that. He thinks it is a bene5t, and most important to him is the economic growth. Council Member Coffey stated she will be votirig against the Hearing Examiner's decision as she thinks there is enough public benefit which will warrant the vacation, especially in looking at Roche Fruit and Washington Fruit. City Attorney Cutter stated there are several requirements that must be met on a vacation and the property right transfer will happen once the compensation and steps have been met, Motion: Other, Moved by Council Member Dave Ettl, Seconded by Assistant Mayor Maureen Adkison. Carried 4-3. Council Members voting Aye: Adkison, Coffey, EttI, Lover. Council Members voting Nay: BrimbP|, Covv|ey, Ensey. CITY MANAGER'S REPORTS Page opv10 8. Resolution approving Amended Agreement with The Watershed Company for professional services relating to Shoreline Master program update and support services Council Member Lover asked why the City needs this agreement. Community Development Director Osguthorpe responded this is a state mandate, which is funded partially by the state. The City Clerk read the resolution by title. RESOLUTION NO. R-2013-055, A RESOLUTION pertaining to Shoreline Master Program; authorizing the City manager to execute an amended agreement between The Watershed Company and City of Yakima for professional services for update of Shoreline Master Program Motion: Approve, Moved by Council Member Sara Bristol, Seconded by Assistant Mayor Maureen Adkison. Adopted 6-1. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl. Council Members voting Nay: Lover. 9. Action Plan for North 1st Street Community Development Director Osguthorpe briefed Council on the plan. After Council discussion, Bristol moved and Ensey seconded to remand this issue to the Council Built Environment Committee. Motion: Approve, Moved by Council Member Sara Bristol, Seconded by Council Member Rick Ensey. Carried 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. 10. Consideration of Commercial Vehicle Education Program Proposal Chief Rizzi introduced Sgt. Seeley who briefed Council on the program. After Council discussion, Cawley moved Coffey seconded to approve the program. Motion: Approve, Moved by Mayor Micah Cawley, Seconded by Council Member Kathy Coffey. Carried 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. 11. Resolution amending contract with the Humane Society of Central Washington Codes Manager/Fire Marshal Caruso briefed Council on the issue. The City Clerk read the resolution by title. RESOLUTION NO. R-2013-056, A RESOLUTION authorizing the City manager to execute Amendment No. 1 to Animal Control Agreement with Humane Society of Central Washington Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Council Member Kathy Coffey. Adopted 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. 12. Resolution authorizing agreement with Huibregtse, Louman Associates for engineering services at the Yakima Airport Interim Airport Manager Peterson briefed Council on the contract. Mike Battle of Huibregtse Louman and Associates reminded Council this contract will allow them to start the project; however, the FAA is still working on the final design standards. The City Clerk read the resolution by title. RESOLUTION NO. R-2013-057, A RESOLUTION authorizing the City Manager to execute an Engineering Services Agreement with Huibregtse, Louman Associates, Inc. (HLA), in the amount not to exceed $181,200.00 for Engineering Services for Alpha Taxiway Rehabilitation Page 9 of 13 Construction Project AIP 3-53-0089-33 Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Council Member Kathy Coffey. Adopted 7-0. Council Members voting Aye: Adkison, Bhoto|, Cmvvey, Coffsv, Enoey, Ett|.Lower. 13. Resolution authorizing an agreement with the Washington State Recreation and Conservation Offlce for a grant of $209,620 for improvements related to Phase 2 of the Riparian Zone Outfall Alternatives at the Cits Wastewater Treatment Plant Utility Director Debbie Cook introduced Utility Engineer Ryan Anderson who briefed Council on the issue. The City Clerk read the resolution by title. RESOLUTION NO. R-2013-058, A RESOLUTION authorizithe City Managerto execute an Agreement with the Washington State Recreation and Conservation Office and City of Yakima for a grant of $209,620 for improvements related to Phase 2 of Riparian Zone Ouffall Alternatives at the City's Wastewater Treatment P!ant Motion: Approve, Moved by Council Member Rick EnseySeconded by Council Member Sara Bristol. Adopted 7-0. Council Members voting Aye: Adkison, Bhato|, CmxWmy, Coffey, Enmey, Ett|.Lover. 14. Resolution authorizing acquisition of conservation easement along a portion of Cowiche Creek for watershed protection, authorizing expenditure of up to $70,000 in water enterprise funds for such acquisition, and authorizing the City Manager to negotiate and execute all documents necessary and appropriate to accomplish such acquisition Assistant City Attorney Kunkler briefed Council on the issue. The City Clerk read the resoFution by title. RESOLUTION NO. R-2013-059, A RESOLUTION authorizing acquisition of conservation easement along portion of Cowiche Creek for watershed protection,outhorizing expenditure of up to $70,000 in water enterprise funds for such acquisition, and authorizinthe City Manager to negotiate and execute all documents necessary and appropriate to accomplish such acquisition Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Council Member Sara Bristol. Adopted 7-0. Council Members voting Aye: Adk|mon, Br|mtm|, Cmwdey, Coffey, Ensey, EtU.Lovar. ORDINANCES 15. Ordinance authorizing the issuance and sale of a Limited Tax General Obligation Bond af the City in the principaamount of not to exceed $5,000,000 for the purpose of financing costs of street improvements in the City; providing the form of the bond; and authorizing the sale of the bond to U.S. Bank National Association Finance and BDeana Gregory from Pacifica Law Group who discussed the issue in more depth. Council Member Coffey stated she is not comfortable using general funds to support a bond. The City Clerk read the ordinance by title. ORDINANCE NO. 2013-017, AN ORDINANCE of the City Council of the City of Yakima, Washington, authorizing the issuance and sale cf a Limited Tax GeneralObligation City in the principal amount of Not to Exceed $5000000 for the purpose of financing costs of street improvements in the City; providing the form of the bond; and authorizing the sale of the bond to U.S. Bank National Association Page 10 of 13 Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Council Member Sara Bristol. Passed 6-1. Council Members voting Aye: Adkison, Bristol, Cawley, Ensey, EttI, Lover. Council Members voting Nay: Coffey. 16. First reading of an Ordinance amending the 2013 budget for the City pfYakima; and making appropriations from Unappropriated Fund Balances within various Funds for expenditure during 2013 as noted in the summary attached (no action required at this meeting; second reading scheduled May 21, 2013). An Ordinance amendinthe 2013 budget and appropriating funds, was read by title only, and laid on the table until May 21, 2013 for a second reading. The City Clerk read the ordinance by title, AN ORDINANCE amending the 2013 budget for the City of Yakima; and making appropriations from Unappropriated Fund Balances within various funds for expenditure during 2013 to provide for 2 additional animal controofficers; an additional Pohce Sergeant Officer prom;additiona|nostmhoreoonfigunetheFranWinPm,kparNng|ot;andpaMjoipotion with Cowiche Canyon Conservancy to purchase undeveloped property for water quality purposes 17. Ordinance amending section 9.70.190 of the Yakima Municipal Code regarding Special Events & Parades City Manager O'Rourke explained the changes to the ordinance, which would help recover some of the costs of police security, traffic control and clean-up. Council Member Ettl stated he has checked with other cities, some of which have a 100% cost Brian Canfield, City resident, stated he is speaking on behalf of the Sunfair parade, which is already expensive and any other fees would be detrimental to the event. John Cooper, CEO of the Visitor Center, speaking on behalf of the Sports Commission, stated they are a downtown partner and sponsor one of the biggest events in Yakima, the Hot Shot Tournament, which is in their 11th year and brings over 10,000 people to the community. When groups are classified in different areas, they should all be held to the same standards. Heidi Andersori, with Childrens Wishes and Dreams, stated they are 100% volunteer have never had an incident of any kind, and provide a certificate of insurance. Since 2005 they have granted 137 wishes and if they had to provide funding there would be less wishes granted. Joe Mann, City resident, has worked on parades for 15 years and is currently the president of the lighted Christmas parade. He agrees with ranking of categories; however, most parades are a community celebration. TJ Davis, City resident, owner of Shorty's, stated if they are put into category B, they would be looking at roughly $3,500, which their budget wouldn't allow for, They are artempting to obtain some sponsors and wondered if there were analternatives such as using police cadets or reserve officers. They are hoping to combine their event with others and have an annual kick-off celebration. He noted some of the draft ordinances are based on the West side where they have a larger community base to draw from. Linda Davis, City resident, owner of Shorty's, stated their event will help promote and bring people downtown on a weekend, when it isn't busy. Council Membeshe did't think they were ready to approve this ordinance and is uncomfortable with the ambiguity. Mayor Cawley feels this would provide more clarity. City Manager O'Rourke explained the draft provided lists definitions for each category that were self Page 11pr1n explanatory. The City Clerk read the ordinance by title. Bristol moved and Coffey seconded to send this issue to the Council Economic Development Committee to be considered in conjunction with the Downtown Plan. AN ORDINANCE relating to special events; amending Section 9.70.160 regarding insurance requirements for special events, and Section 9.70.190 of the Yakima Municipal Code regarding special event fees Motion: Other, Moved by Council Member Sara Bristol, Seconded by Council Member Kathy Coffey. Carried 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. 18. Ordinance amending Section 9.25.020 of the Yakima Municipal Code regarding designation of permissible open cruising events on Yakima Avenue Economic Development Manager Hawkins explained the changes to the ordinance. Mayor Cawley noted Javier Gonzalez put in a note requesting a cruise application for July 20, Council Member Bristol stated the City banned cruising several years ago after a shooting. She recently spoke with Captain Copeland who confirmed the shooting did not involve participants and people can't live in fear of what might happen. Mayor Cawley noted this should reflect the increase in police overtime budget for this event. The City Clerk read the ordinance by title. Bristol moved and Adkison seconded to amend the ordinance to include the Locos Car club cruise on July 20. Motion to amend carried 7-0 by unanimous roll call vote. ORDINANCE NO. 2013-018, AN ORDINANCE relating to traffic control and open cruising; amending Section 9.25.020 of the Yakima Municipal Code regarding designation of permissible open cruising events on Yakima Avenue Motion: Approve, Moved by Council Member Sara Bristol, Seconded by Assistant Mayor Maureen Adkison. Passed 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. 19. Other Business A. Citizen survey questions and options City Manager O'Rourke noted the two questions on the agenda item for the citizen survey. Council Member Lover asked if they need to pay for the extras. Council Member Bristol said she doesn't like to spend the money either, but thinks they should have one for comparison to the previous year's survey. Motion: Approve, Moved by Council Member Rick Ensey, Seconded by Council Member Kathy Coffey. Carried 6-1. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl. Council Members voting Nay: Lover. *Council Member Ensey stated the City decided earlier not to accept Comprehensive Plan amendments. He feels they made a mistake and didn't do this in a transparent manner. In the past, the City consistently accepted amendments and there was no public notification that the City wouldn't be accepting them. Council Member Coffey asked if there were people who would be filing amendments. Council Member Ensey replied no one filed amendments because they were waiting for the City to open up the process. City Manager O'Rourke stated they are not opposed to opening the process, but they should Page 12 of 13 determine what volume of work they are looking at given the current workload. If there are a dozen, it may require a re -prioritization to staff. Staff will research and bring back more information at the next Council meeting. Council Member Ettl asked if the City violated an ordinance by not opening up the process. City Attorney Cutter stated the City did not violate any ordinance. Ensey moved and Lover seconded to open up amendements to the Comprehensive Plan. Motion failed 4 to 3 with Etti, Bristol, Cawley and Coffey voting no. Coffey moved and Ettl seconded to direct staff to report back at the next meeting any interest by the developers to open the Comprehensive Plan process. Motion: Other, Moved by Council Member Kathy Coffey, Seconded by Council Member Dave Ettl. Carried 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. *Council Member Coffey stated she received a call from a citizen regarding Miller Park and a curfew ordinance and she would like more information. City Manager O'Rourke noted the City Attorney's office will see what is legally allowable and report back to Council. Council Member Lover stated this should go before the Council Public Safety Committee. *Mayor Cawley stated any time a citizen complains and states names and addresses, it is wrong and he will do his best to enforce that this doesn't happen and be respectful of staff and citizens. 20. Adjournment The meeting adjourned at 10:17 p.m. Motion: Adjourn, Moved by Council Member Rick Ensey, Seconded by Council Member Kathy Coffey. Carried 7-0. Council Members voting Aye: Adkison, Bristol, Cawley, Coffey, Ensey, Ettl, Lover. CERTIFICATION READ AND CERTIFIED ACCURATE BY ATTEST: COUNCIL MEMBER DATE COUNCIL MEMBER DATE CITY CLERK MAYOR Page 13 of 13 Affidavit of Publication STATE OF WASHINGTON,) COUNTY OFYAKIMA ) Debbie Martin, being first duly sworn on oath deposes and says that she/he is the Accounting clerk of Yakima Herald -Republic, Inc., a daily newspaper. Said newspaper is a legal newspaper approved by the Superior Court of the State of Washington for Yakima County under an order made and entered on the 13th day of February, 1968, and it is now and has been for more than six months prior to the date of publication hereinafter referred to, published in the English lan- guage continually as a daily newspaper in Yakima, Yakima County, Washington. Said newspa- per is now and has been during all of said time printed in an office maintained at the aforesaid place of publication of said newspaper. That the annexed is a true copy of a: CITY OFYAKIMA CERTIFICATION OF OREN it was published in regular issues (and not in supplement form) of said newspaper once each day and for a period of 1 times, the first insertion being on 05/10/2013 and the last insertion be- ing on 05/10/2013 Yakima Herald -Republic 05/10/13 YakimaHerald.com 05/10/13 and the such newspaper was regularly distributed to its subscribers during all of the said period. That the full amount of the fee charged for the foregoing public tion is the sm of $70.50 Accounting Clerk Sworn to before me this /.341 day of, Mil 2013 / 7)/ Notary Public in and for State of Washington, residing at Yakima CITY OF YAKIMA CERTIFICATION 0 OF ORDINANCES ENACTMENT Ordinance Nos. 2013- 017 through 2013-018 were passed by the City Council of the City of Yakima, Washington on the 7th day of May, 2013. The summaries of the ordinances are printed below this certificate. A copy of the full text of any ordinance is available for inspection or will be mailed upon request by phoning 575-6000. ORDINANCE NO. 2013- 017, of the City Council of the City of Yakima, Washington, authorizing the issuance and sale of a Limited Tax Gen- eral Obligation Bond of the City in the principal amount of Not to Exceed $5,000,000 for the pur- pose of financing costs of street improvements in the City: providing the form of the bond; and authorizing the sale of the bond to U.S. Bank National .ciation ORDINANCE NO. 2013- 018 relating to traffic control and open cruis- ing; amending Section 9.25.020 of the Yakima Municipal Code regard- ing designation of per- missible open cruising events on Yakima Avenue Dated this 8th day of May 2013. (320395) May 10, 2013 Courtesy of Yakima Herald -Republic bank. Mire Sur Sari= Guaranteed Fixed Rate Interest Lock and indemnity Agreement June 5,2013 City of Yakima Yakima, Washington Re: Fixed Rate Interest Lock and Indemnity Agreement City of Yakima, Washington: Effective as of the date of this letter, U.S. Bank National Association hereby commits funding of a proposed term loan to you in the amount of not to exceed $5 million at a fixed rate of interest equal to 1.67% per annum ("Fixed Rate Interest") subject to your fulfillment of the document requirements and other funding conditions set forth in the Letter of Interest to you dated April 25, 2013 ("Fixed Rate Loan"). In the event that prior to June 10, 2013 ("Funding Date"), the Fixed Rate Loan is not funded due to your failure to close the loan and draw the funds thereunder or your failure to meet the conditions set forth in the commitment letter described above, you unconditionally and irrevocably agree to pay us in good funds the Breakfunding Prepayment Fee described in the attached Addendum within three (3) business days of our written request. For purposes of the attached Breakfunding Prepayment Fee Addendum, the failure to fund the Fixed Rate Loan on or before the Funding Date will be deemed a prepayment of the entire principal of the Fixed Rate Loan as of the Funding Date. The Breakfunding Prepayment Fee shall be calculated assuming a funding of the Fixed Rate Loan on the Funding Date, an initial principal amount as stated above, an amortization period as described in the commitment letter, and timely monthly installment payments of principal and accrued interest clue on the first day of each month commencing on the first day of the first full month after the Funding Date (unless othe e stated in the commitment letter). If you agree to the terms of the letter agreement, please sign the original of this letter below and retum to the undersigned. U.S. BANK NATIONAL ASSOCIATION By: 14 or F.lJ Herbert F. Neufeld, Vice President — Government Banking Division 1 Agreed to this 6th day of June, 2013 CITY OF YAKIMA, WASFIGTON By: Name an SIGNAT DENTIFICATION AND NONLITIGATION CERTIFICATE WE, MICAH CAWLEY AND SONYA CLAAR TEE, the duly chosen, qualified and acting Mayor and City Clerk, respectively, of the City of Yakima, Washington (the "City"), DO HEREBY certify that the following -described Limited Tax General Obligation Bond, 2013 (the "Bond") of the City bears our true and correct facsimile signatures. The Bond is issued in fully registered form in the total principal amount of $5,000,000, is dated the date of its delivery to U.S. Bank National Association, as purchaser, and is payable as set forth in Ordinance No. 2013-017 of the City passed on May 7, 2013. FURTHER CERTIFY that there is no controversy or litigation pending, or to the best of our knowledge threatened, affecting the issuance and delivery of the Bond, the levy and collection of taxes to pay the principal thereof and interest thereon, the validity of the Bond, the corporate existence or boundaries of the City, or the title of the present officers of the City to their respective offices, and that no authority or proceedings for the issuance of the Bond has or have been repealed, revoked or rescinded. Dated as of this 10th day of June, 2013. Signature Title Mayor City Clerk STATE OF WASHINGTON) ) ss. CO TY OF YAKI I certify that I know or have satisfactory evidence that MIC CA EY is the person who appeared before me, and said person acknowledged that said person signed this instrument, on oath stated that said person was authorized to execute the instrument and acknowledged it as the Mayor of the City of Yakima, Washington, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: Zit , 2013. STATE OF WASHING MICHELLE I. WILTSEY NOTARY PUBLIC COMMISSION EXPI MARCH 15,2014 N P a e My commission expires (Use this space for notarial stamp/seal) STATE OF WAS GTON ) ) ss. COUNTY OF Y I certify that I know or have satisfactory evidence that SONYA CL • TEE is the person who appeared before me, and said person acknowledged that said person signed this instrument, on oath stated that said person was authorized to execute the instrument and acknowledged it as the City Clerk of the City of Yakima, Washington, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: n-7.4., 5,2Ol3. STATE OF WASHINGTON MICHELLE L WILTSEY NOTARY PUBLIC COMMISSION EXPI MARCH 15,2014 (Use this space for notarial stamp/seal) ublic Prin My co mission expires -2 CERTIFICATE OF MANUAL SIGNATURE STATE OF WASHINGTON ) ) ss. COUNTY OF YAKIMA I, the undersigned affiant, being first duly sworn, on oath depose and say: My n e is Micah Cawley (Print or type) I have been duly chosen and am qualified and acting as Mayor (title or position) for City of Yakima, Washington (nano of municipality) The signature appearing above is my true manual signature. This affidavit is made to comply with Ch. 86, Wash. Sess. Laws of 1969. SUBSCRIBED AND SWORN TO before me this <-5-777of , 2013. STATE OF WASHINGTON MICHELLE L. W1LTSEY NOTARY PUBLIC COMMISSION EXPI MARCH 15,2014 Use this space for notarial stamp/seal) P e My commission expires CERTIFICATE OF A A S GNATURE STATE OF WASHINGTON ) ss. COUNTY OF YAKIMA I, the undersigned affiant, being first duly sworn, on oath depose and say: My name is Sonya Claar Tee (Prim or rype) I have been duly chosen and am qualified and acting as City Clerk (fir, or position) for City of Yakima, Washington (name of municipality) The signature appearing above is my true manual signature. This affidavit is made to comply with Ch. 86, Wash. Sess. Laws of 969. Signature 5" SUBSCRIBED AND SWORN TO before me this of _ , 2013. STATE OF WASHINGTON MICHELLE L WILTSEY NOTARY PUBLIC COMMISSION EXPIRES MARCH 15,2014 (Use this space for notarial stamp/seal) Not Prin My commission expires CERTIFICATE OF MAILING , Kristin Patterson the duly chosen (PRINT OR TYPE NAME) qualified and acting Paralegal (POSITION) of the law firm of Pacifica Law Group LLP DO HEREBY CERTIFY that on the 27th day of September, 2013 I mailed to the Secretary of State of the State of Washington, postage prepaid, a certificate of manual signature in the fo attached hereto executed by the following officials: Dated Name Position Micah Cawley Mayor, City of Yakima, Washington Sonya Claar Tee City Clerk, City of Yakima, Washington FEDERAL TAX CERTIFICATE I, the undersigned officer of the City of Yakima, Washington (the "City"), make this certification for the benefit of all persons interested in the exclusion from gross income for federal income tax purposes of the interest to be paid on the City's Limited Tax General Obligation Bond, 2013 (the "Bond"), which is being issued in the aggregate principal amount of $5,000,000 and delivered simultaneously with the delivery of this certificate. I do hereby certify as follows in good faith on the date of issue of the Bond: 1. Responsible Officer. I am the duly chosen, qualified and acting officer of the City for the office shown below my signature; as such, I am familiar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the City. I am the officer of the City charged, along with other officers of the City, with responsibility for issuing the Bond. 2. Code and Regulations. The Bond is subject to the provisions of sections 141, 148, 149 and 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations (the "Regulations") promulgated under sections 141, 148, 149 and 150 of the Code. These provisions of the Code and Regulations impose restrictions on the use of note - financed facilities and on the investment of note proceeds. This certificate is being executed and delivered pursuant to sections 1.141 -1 through 1.141-1 5, 1.148-0 through 1.148-1 1, 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2 of the Regulations. 3. Definitions. The capitalized terms used in this certificate (unless otherwise defined) that are defined in Ordinance No. 2013-017 passed on May 7, 2013, authorizing the issuance of the Bond (the "Bond Ordinance") shall for all purposes hereof have the meanings therein specified. All terms defined in the Code or Regulations shall for all purposes of this certificate have the same meanings as given to those terms in the Code and Regulations unless the context clearly requires otherwise. 4. Reasonable Expectations. The facts and estimates that are set forth in this certificate are accurate. The expectations that are set forth in this certificate are reasonable in light of such facts and estimates. There are no other facts or estimates that would materially change such expectations. The undersigned has to the extent necessary reviewed the certifications set forth herein with other representatives of the City as to such accuracy and reasonableness. The undersigned has also relied, to the extent appropriate, on representations set forth in the certificate of U.S. B. National Association (the "Purchaser"), the purchaser of the Bond, attached hereto as Exhibit A. The undersigned is aware of no fact, estimate or circumstance that would create any doubt regarding the accuracy or reasonableness of all or any portion of such documents. 5. Description of Governmental Purpose. The City is issuing the Bond pursuant to the Bond Ordinance for the purposes of funding (a) street improvements (the "Project") and (b) the costs of issuance of the Bond. The primary purpose of each transaction undertaken in connection with the issuance of the Bond is a bona fide governmental purpose. 6. Amount and Expenditure of Sale Proceeds of the Bond. (a) Amount of Sale Proceeds. The sale proceeds from the issuance of the Bond will be $5,000,000.00, based on the amount set forth on Exhibit A hereto. Such amount represents the stated redemption price at maturity of the Bond. No portion of the purchase price of the Bond is provided by the issuance of any other issue of obligations. The sale proceeds will be expended as follows: (i) The amount of $9,000.00 will be disbursed to pay costs of issuance of the Bond. (ii) The ount of $4,991,000.00 will be deposited in the Project Fund and is expected to be disbursed to pay or reimburse the costs of construction of the Project. The aggregate amount of the costs of construction of the Project is anticipated to be not less than such amount. Any costs of the Project not financed out of original or investment proceeds of the Bond will be financed out of the City's available funds. (b) Reimbursement. Other than to the extent of preliminary expenditures (i.e., architectural, engineering, surveying, soil testing, bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of the Project, other than land acquisition, site preparation, and similar costs incident to commencement of construction) not in excess of 20% of the aggregate issue price of the Bond, no portion of the amount described in paragraph 6(a) above will be disbursed to reimburse the City for any expenditures made by the City prior to the date that is 60 clays before the earlier of the issue date or the date the City made an official declaration of intent to reimburse (the "Declaration"), if any, describing the Project, stating the maximum principal amount of obligations expected to be issued for the Project, and stating the City's reasonable expectation on that date that it would reimburse expenditures for costs of the Project with proceeds of an obligation. The Declaration, if any, is not an official intent to reimburse that was declared as a matter of course, or in an amount substantially in excess of the amount expected to be necessary for the Project. The City has not engaged in a pattern of failure to reimburse original expenditures covered by declarations of official intent. Such reimbursed portion will be treated as spent for purposes of paragraphs 11(b) and 15 below on the date an allocation is made in writing that evidences the City's use of the proceeds for original expenditure (provided, however, that an allocation made within 30 days of the date of issue may be treated as made on the date of issue). (c) No Working Capital. Except for an amount that does not exceed five percent of the sale proceeds of the Bond (and that is directly related to capital expenditures financed by the Bond), the City will only expend proceeds of the Bond for (i) costs that would be chargeable to the capital accounts of the Project if the City's income were subject to federal income taxation and (ii) interest on the Bond in an amount that does not cause the aggregate amount of interest paid on all of the Bond to exceed that amount of interest on the Bond that is attributable to the period that commences on the date hereof and ends on the later of (A) the date that is three years from the issue date of the Bond or (B) the date that is one year after the date on which the Project is placed in service. 2 (d) No Sale of Conduit Loan. No portion of the sale proceeds of the Bond has been or will be used to acquire, finance, or refinance any conduit loan. (e) No Overissuance. The proceeds of the Bond will not exceed by more than a minor portion (as defined in paragraph 13 below) the amount necessary to accomplish the governmental purposes of the Bond and, in fact, are not expected to exceed by any amount the amount of proceeds allocated to expenditures for the governmental purposes of the Bond. (f) Allocations and Accounting. The proceeds of the Bond will be allocated to expenditures not later than 18 months after the later of the date the expenditure is made or the date the Project is placed in service, but in no event later than the date that is 60 days after the fifth anniversary of the date hereof or the retirement of the last Bond, if earlier. The allocation of proceeds will be made by consistently employing the direct -tracing method of accounting. No proceeds of the Bond will be allocated to any expenditure to which proceeds of any other obligations have heretofore been allocated. 7. Pre -Issuance Accrued Interest. The Bond is dated as of the initial date of delivery to the Purchaser, and the City will receive no pre -issuance accrued interest on the Bond. 8. Expenditure of Investment Proceeds. The best estimate of the City is that investment proceeds resulting from the investment of any proceeds of the Bond pending expenditure of such proceeds for costs of the Project will be retained in the Project Fund and disbursed to pay or reimburse Project costs in addition to those described in paragraph 6 above. 9. No Replacement Proceeds. Other than amounts described in this certificate, there are no amounts that have a sufficiently direct nexus to the Bond or to the governmental purposes of the Bond to conclude that the amounts would have been used for that governmental purpose if the proceeds of the Bond were not used for that purpose. Specifically, (a) No Sinking Funds. Other than to the extent described in this certificate, there is no debt service fund, redemption fund, reserve fund, replacement fund, or similar fund reasonably expected to be used directly or indirectly to pay principal or interest on the Bond. (b) No Pledged Funds. Other than amounts described in this certificate, there is no amount that is directly or indirectly pledged to pay principal or interest on the Bond, or to a guarantor of part or all of the Bond, such that such pledge provides reasonable assurance that such amount will be available to pay principal or interest on the Bond if the City encounters financial difficulty. For purposes of this certification, an amount is treated as so pledged if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the holders or the guarantor of the Bond. (c) No Other Replacement Proceeds. There are no other replacement proceeds allocable to the Bond because the City reasonably expects that the term of the Bond will not be longer than is reasonably necessary for the governmental purposes of the Bond. Furthermore, if the term of the Bond is longer than is reasonably necessary for the governmental purposes of the Bond, the City does not reasonably expect to have available amounts during the portion of such period that is longer than is reasonably necessary. The City reasonably expects that the Bond would be issued to achieve the governmental purpose of the Bond independent of 3 any arbitrage benefit. The Bond would have been issued if the interest on the Bond were included in gross income (assuming that the hypothetical taxable interest rate would be the same as the actual tax-exempt interest rate). (d) Weighted Average Economic Life. The weighted average maturity of the Bond will not be greater than 120 percent of the weighted average estimated economic life of the portion of the Project financed with proceeds of the Bond, determined in accordance with section 147(b) of the Code. Such weighted average estimated economic life is determined in accordance with the following assumptions: (i) the weighted average was detei Joined by taking into account the respective cost of each of the assets financed by the Bond; (ii) the reasonably expected econo 'c life of an asset was determined as of the later of the date hereof or the date on which such asset is expected to be placed in service (i.e., available for use for the intended purposes of such asset); (iii) the economic lives used in making this determination are not greater than the useful lives used for depreciation under section 167 of the Code prior to the enactment of the current system of depreciation in effect under section 168 of the Code (i.e., the "mid -point lives") under the asset depreciation range ("ADR") system of section 167(m) of the Code, as set forth in Revenue Procedure 83-35, 1983-1 C.B. 745, where applicable, and the "guideline lives" under Revenue Procedure 62-21, 1962-2 C.B. 418, in the case of structures; and (iv) land or any interest therein has not been taken into account in determining the average reasonably expected economic life of such Project, unless 25 percent or more of the net proceeds of the Bond is to be used to finance land. 10. Yield on the Bond. For the purposes of this certificate, the yield on the Bond is the discount rate that, when used in computing the present value as of the issue date of the Bond, of all unconditionally payable payments of principal, interest and fees for qualified guarantees on the Bond, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bond as of the issue date. For purposes of determining the yield on the Bond, the issue price of the Bond is the price paid by the Purchaser, as set forth in Exhibit A hereto. No issuance costs or costs of carrying or repaying the Bond are taken into account for purposes of computing the yield on the Bond. 11. Temporary Periods and Yield Restriction. (a) Pre -Issuance Accrued Interest. The Bond is dated as of the initial date of delivery to the Purchaser, and the City will receive no pre -issuance accrued interest on the Bond. (b) Proiect. The City has incurred or will incur within six months of the date hereof a binding obligation to a third party which is not subject to any contingencies within the control of the City or a related party pursuant to which the City is obligated to expend at least five percent of the sale proceeds of the Bond on the Project. The City reasonably expects that work on or acquisition of the Project will proceed with due diligence to completion and that the proceeds of the Bond will be expended on the Project with reasonable dispatch. The City reasonably expects that 85 percent of the sale proceeds of the Bond will have been expended on the Project prior to the date that is three years after the issue date. Accordingly, the City may invest the sale proceeds of the Bond at an unrestricted yield for a three year temporary period. Any sale proceeds not expended prior to the date that is three years after the issue date, will be invested at a yield not "materially higher" than the yield on the Bond, except as set forth in 4 paragraph 13 below. The City reasonably expects that any amount derived from the investment of sale proceeds of the Bond and from the investment of such investment income will not be commingled with substantial other receipts or revenues of the City and will be expended prior to the date that is three years after the issue date, or one year after receipt of such investment income, whichever is later. Accordingly, the City may invest such investment proceeds at an unrestricted yield. Any such investment proceeds not expended prior to such date will be invested at a yield not "materially higher" than the yield on the Bond, except as set forth in paragraph 13 below. 12. Bond Fund. Pursuant to the Bond Ordinance, the City has created or continued, as the case may be, a debt service fund (the "Bond Fund") and the proceeds from all taxes levied, assessed and collected for and on account of the Bond are to be deposited in such Fund. The revenues are anticipated to be sufficient to pay debt service each year on the Bond. The Bond Fund will be depleted at least once each year except for a reasonable carryover amount not to exceed the greater of (a) one year's earnings on the Bond Fund or (b) one -twelfth of annual debt service. The City reasonably expects that any such revenues deposited in the Bond Fund will be disbursed within 13 months of the date of receipt of such revenues by the City. Amounts on deposit in the Bond Fund may be invested for an allowable temporary period of 13 months from the date such amount are deposited into the Bond Fund. Any such . ount not expended within such period will be invested at a yield not "materially higher" than the yield on the Bond, except as set forth in paragraph 13 below. 13. Minor Portion. All gross proceeds of the Bond will be invested in accordance with paragraphs 11 and 12 above. To the extent such amounts remain on hand following the periods set forth in paragraphs 11 and 12 above or exceed the limits set forth in paragraph 12 above, the City will invest such amounts at a restricted yield as set forth in such paragraphs; provided, however, that a portion of such . ounts, not to exceed in the aggregate the lesser of $100,000 or five percent of the sale proceeds of the Bond (the "Minor Portion"), may be invested at a yield which is higher than the yield on the Bond. 14. Issue. There are no other obligations that (a) are sold at substantially the same time as the Bond (i.e., within 15 days), (b) are sold pursuant to the same plan of financing with the Bond, and (c) will be paid out of substantially the same source of funds as the Bond. 15. Compliance With Rebate Requirements. (a) General. The City has covenanted in the Bond Ordinance that it will take all necessary steps to comply with the requirement that rebatable arbitrage earnings on the investment of the gross proceeds of the Bond, if any, within the meaning of section 148(f) of the Code be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bond as may be required to calculate such rebatable arbitrage e. ings separately from records of amounts on deposit in the funds and accounts of the City which are allocable to other note issues of the City or moneys which do not represent gross proceeds of any notes of the City, (ii) calculate at such intervals as may be required by applicable Regulations, the ount of rebatable arbitrage earnings, if any, earned from the investment of the gross proceeds of the Bond and (iii) pay, not less often than every fifth anniversary date of the delivery of the Bond and within 60 days following the final maturity 5 of the Bond, or on such other dates required or permitted by applicable Regulations, all ounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bond that might result in a reduction in the amount required to be paid to the federal government because such . angement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's-length and had the yield on the issue not been relevant to either Party. (b) Six Month Spending Exception. (i) Proceeds of the Bond. The Bond qualifies for an exception to the arbitrage rebate requirements provided that the gross proceeds allocated to the credit of the Bond are spent no later than six months from the date hereof. (ii) Special Spending Rules. For purposes of this spending exception, money is treated as spent if it is spent to pay interest on the Bond, but not to pay principal on the Bond, and if it is spent to pay either principal or interest on another issue of obligations. (iii) Failure of Spending Requirements. If amounts are not spent by six months from the date hereof, the City will determine whether any other exceptions to arbitrage rebate requirements apply to the Bond and make all computations necessary to comply with any such exceptions. If no arbitrage rebate exceptions apply to the Bond, the City will make or cause to be made, all computations, payments and filings necessary to comply with the arbitrage rebate requirements of section 148 of the Code. 16. Not an Abusive Transaction. (a) General. No action taken in connection with the issuance of the Bond will enable the City to (i) exploit, other than during an allowable temporary period, the difference between tax-exempt and taxable interest rates to obtain a material financial advantage (including as a result of an investment of any portion of the gross proceeds of the Bond over any period of time, notwithstanding that, in the aggregate, the gross proceeds of the Bond are not invested in higher yielding investments over the term of the Bond), and (ii) issue more bonds, issue bonds earlier, or allow bonds to remain outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes of the Bond. To the best of our knowledge, no actions have been taken in connection with the issuance of the Bond other than actions that would have been taken to accomplish the governmental purposes of the Bond if the interest on the Bond were not excludable from gross income for federal income tax purposes (assuming the hypothetical taxable interest rate would be the s. e as the actual tax-exempt interest rate on the Bond). (b) No Sinking Fund. No portion of the Bond has a term that has been lengthened primarily for the purpose of creating a sinking fund or similar fund with respect to the Bond. 17. No Arbitrage. On the basis of the foregoing facts, estimates and circumstances, it is expected that the gross proceeds of the Bond will not be used in a manner that would cause the 6 Bond to be an "arbitrage bond" within the meaning of section 148 of the Code and the Regulations. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change such expectations. 18. No Private Use, Payments or Loan Financing. (a) General. The City reasonably expects, as of the date hereof, that no action or event during the entire stated term of the Bond will cause either the "private business tests" or the "private loan financing test," as such terms are defined in the Regulations, to be met. Specifically, (i) No portion of the proceeds of the Bond will be used in a trade or business of a nongovernmental person. For purposes of determining use, the City will apply rules set forth in applicable Regulations and Revenue Procedures promulgated by the Internal Revenue Service, including, ong others, the following rules: (A) any activity carried on by a person other than a natural person or a state or local governmental unit will be treated as a trade or business of a nongovernmental person; (B) the use of all or any portion of the Project is treated as the direct use of proceeds; (C) a nongovernmental person will be treated as a private business user of proceeds of the Bond as a result of ownership, actual or beneficial use pursuant to a lease, or a management or incentive payment contract, or certain other arrangements such as a take - or -pay or other output -type contract; and (D) the private business use test is met if a nongovernmental person has special legal entitlements to use directly or indirectly the Project. (ii) The City has not taken and will not take any deliberate action that would cause or permit the use of any portion of the Project to change such that such portion will be deemed to be used in the trade or business of a nongovernmental person for so long as any of the Bond remains outstanding (or until an opinion of nationally recognized note counsel is received to the effect that such change in use will not adversely affect the excludability from gross income for federal income tax purposes of interest payable on the Bond). For this purpose, any action within the control of the City is treated as a deliberate action. A deliberate action occurs on the date the City enters into a binding contract with a nongovernmental person for use of the Project that is not subject to any material contingencies. (iii) All payments of the debt service on the Bond will be paid from and secured by a generally applicable tax. For this purpose, a generally applicable tax is a tax (A) that is an enforced contribution exacted pursuant to legislative authority in the exercise of the taxing power that is imposed and collected for the purpose of raising revenue to be used for governmental purposes and (B) that has a uniform tax rate that is applied to all persons of the same classification in the appropriate jurisdiction using a generally applicable manner of determination and collection. No portion of the payment of the debt service on the Bond will be directly or indirectly derived from payments (whether or not to the City or any related party) in respect of property, or borrowed money, used or to be used for a private business use. Furthermore, no portion of the payment of the debt service on the Bond will be directly or indirectly secured by any 7 interest in property used or to be used for a private business use or payments in respect of property used or to be used for a private business use. (iv) No portion of the proceeds of the Bond will be directly or indirectly used to make or finance a loan to any person other than a state or local governmental unit. (b) Dispositions of Personal Property in the Ordinary Course. The City does not reasonably expect that it will sell or otherwise dispose of personal property components of the Project financed with the Bond other than in the ordinary course of an established governmental program that satisfies the following requirements: (i) The weighted average maturity of the portion of the Bond financing personal property is not greater than 120 percent of the reasonably expected actual use of such personal property for governmental purposes; (ii) The reasonably expected fair market value of such personal property on the date of disposition will be not greater than 25 percent of its cost; (iii) Such personal property will no longer be suitable for its governmental purposes on the date of disposition; and (iv) The City is required to deposit amounts received from such disposition in a commingled fund with substantial tax or other governmental revenues and the City reasonably expects to spend such amounts on governmental programs within six months from the date of commingling. Furthermore, the City will not sell or otherwise dispose of all or any portion of the Project in circumstances in which the foregoing requirements are not satisfied unless it has received an opinion of nationally recognized note counsel to the effect that such disposition will not adversely affect the treatment of interest on the Bond as excludable from gross income for federal income tax purposes. (c) Other Agreements. The City will not enter into any agreement with any nongovernmental person regarding the use of all or any portion of the Project during the stated term of the Bond unless such agreement will not adversely affect the treatment of interest on the Bond as excludable from gross income for federal income tax purposes. 19. Weighted Average Maturity. The weighted average maturity of the Bond is the sum of the products of the issue price of the Bond and the number of years to maturity (taking into account any mandatory redemptions), divided by the aggregate sale proceeds of the Bond. 20. Federal Guarantee Prohibition. The Bond is not "federally guaranteed" and the City will not cause or allow the Bond to become "federally guaranteed". Unless otherwise excepted under section 149(b) of the Code, the Bond will be considered federally guaranteed if: (a) The payment of principal or interest with respect to the Bond is guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof); 8 (b) 5 percent or more of the proceeds of the Bond are to be: used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or invested (directly or indirectly) in federally insured deposits or accounts; or (c) The payment of principal or interest on the Bond is otherwise indirectly guaranteed (in whole or in part) by the United States (or an agency or instrumentality thereof). The Bond shall not be treated as federally guaranteed by reason of (i) any guarantee by the Federal Housing Administration, the Depa ent of Veterans Affairs, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association, (ii) any guarantee of student loans and any guarantee by the Student Loan Marketing Association to finance student loans, (iii) any guarantee by the Bonneville Power Authority pursuant to the Northwest Power Act as in effect on July 18, 1984, or (iv) any guarantee by a Federal home loan bank described in Code section 149(b)(3)(E) that is made in connection with the original issuance of bonds during the period beginning on July 8, 2008 and ending on December 31, 2010 (or a renewal or extension of a guarantee so made). The federal guarantee prohibition shall not apply to (i) proceeds of the issue invested for an initial temporary period until such proceeds are needed for the purpose for which such issue was issued, (ii) investments of a bona fide debt service fund, (iii) investments of a reasonably required reserve fund, (iv) investments in bonds issued by the United States Treasury, or (v) other investments pe -tted under Regulations. 21. Bond is not a Hedge Bond. Not more than 50 percent of the proceeds of the Bond will be invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149(g)(3)(A)(ii) of the Code. Further, the City reasonably expects that at least 85 percent of the spendable proceeds of the Bond will be used to c. out the governmental purposes of the Bond within the three-year period beginning on the date the Bond is issued. 9 CITY OF Y By: Name: Cindy E person Title: Director of Budget and Finance Date: June 10, 2013 WASHINGTON EXHIBIT A CERTIFICATE OF PURCHASER 1, the underofficer of U.S. Bank National Association (the "Purchaser"), make this certifi on for the benefit of all persons in sted in the exclusion from gross inco for federat ineorne tax s. of the interest on the Bond. Each capitalized term used herein has the meaning ified for h term in the Federal Tax Certificate to which this Exhibit A is attached (the "Federal Tax Certificate"). 1 hereby certify as follows in good faith as of the issue date: 1. I the duly ch. , qualified and acting officer of the Purc for the office sho below my s ; ure; as such, I am f: iliar with the facts herein certified and I am duly authorized to execute and deliver this certificate on behalf of the Purchaser. I am the officer of the Purchaser charged, along with other officers of the Purchaser, with responsibility for the Bond. 2. The Purchaser has purc ; d the Bond from the City for a purchase price of $5,000,000.00, which price includes no amount of accrued interest. The Purch r intends to hold the Bond for invest .t t oses and not in the capacity of bondhouse, broker, dealer, or similart - n or organization acting in the c city of underwriter or wholesaler. The Bond is not being offered to the public and is not being issued in exchange for property. The issue price described above is equal to the fair rket value of the Bond on the sale date. For this p • se, the sale date is the first date on which there is a binding contract for the sale or exchange of the Bond. 3. The yield on the Bond is not less than 1.6758105 percent. For purposes of this certificate, the term "yield" means that yield which is computed as described in paragraph 10 of the F 1 Tax Certificate. 4. maturity c ghted average • turity of the Bond is 4.288 years. The ighted average d as described in paragraph 19 of the Federal Tax Certificate. The City .y rely on the statements made herein in co ction with king the ns set forth in the F al Tax Certificate and in its efforts to comply with the by the Code on the exclusion of inte t on the Bond ft • the gross me Pacifica Law Group LLP also ; y rely on this certificate for pu si s of its the t t nt ofi st on the Bond - excludable from gross c for x purpo 11 A-1 U.S. BANK NATIONAL ASSOCIATION By: a e: Herbert F. Neufeld Title: Vice P idenI Date: June 10, 2013 Form 8038-G (Rev. September 2011) Department of the Treasury Internal Revenue Service Information Return for Tax -Exempt Governmental Obligations Pi. Under Internal Revenue Code section 149(e) P See separate instructions. Caution: If the issue price is under $100,000, use Form 8038 -GC. OMB No, 1545-0720 ReportingAuthority If Amended Return, check here 110 1 Issuer's name City of Yakima, Washington 11 2 ssuer's employer identifica Jon number (EIN) 91-6001293 3a Name of person (other than issuer) wjth whom the IRS may communicate about is re urn (see ins ruc ions) 3b Te ephone number of other person shown on 3a 4 Number and street (or P.O. box if mail is riot delivered o street address) 129 North 2nd Street 13 Transportation ----------------------------13 oom/sur e 5 Report number For /RS Use On(y) 6 City, town, or post office, state, and ZIP code Yakima, WA 98901 14 Public safety -----------------------------14 7 Date of issue .June 10, 2013 8 Name of issue ed Tax General Obligation Bond, 2013 9 CUSIP number None lOa Name and title of officer or other employee of ttie issuer whom the IRS may call for more information (see instructions) Cindy Epperson, Director of Finance and Budget lOb Telephone number of officer or other employee shown on 10a (509) 575-6000 Type of Issue (enter the issue pr ce . See the instructions and attach schedule. 11 Education . . . . . . . . . . . . . . . . . . . . . . — . . . . . . 12 Health and hospital . . . . . . . . . . . . . _ . . . . . . . . . . . 11 12 13 Transportation ----------------------------13 5,000,000 14 Public safety -----------------------------14 15 Environment (including sewage bonds) . . . . . . . . . . . . . . . . . . . . 15 16 Housing ------------------------------16 17 Utilities ------------------------------17 18 Other. Describe 110. 18 19 If obligations are TANs or RANs, check only box 1 9a . . . . . . . . . . . . . LI If obligations are BANs, check only box 19b . . . . . . . . . . . . . . . . 20 If obligations are in the form of a lease or installment sale, check box ..... . . . ; ...., , Part 111 Description of Obligations. Complete for the entire issue for which this form is being led. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 0612012018 5,000,000 5,000,000 4.288 years 1.6758 % Part IV Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . 24 Proceeds used for bond issuance costs (including underwriters' discount) . . 24 9,000 25 Proceeds used for credit enhancement -------- 25 22 23 0 5,000,000 0 26 Proceeds allocated to reasonably required reserve or replacement fund . 27 Proceeds used to currently refund prior issues . . . . . . 28 Proceeds used to advance refund prior issues . . . . 29 Total (add lines 24 through 28) -------------------- 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) . 26 27 28 0 0 0 29 9,000 30 4,991,000 Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . IlPi. N/A years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . 110- N/A years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) . . . . IP. NIA 34 Enter the date(s) the refunded bonds were issued lo. (MM/DD/YYYY) N/A Cat, No, 53773S Form 8038-G (Rev. 9-2011) For Paperwork Reduction Act Notice, see separate instructions. Form 8038-G (Rev, 9-2011) Page 2 Part VI Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . b c 37 b c d 39 40 41a b d 42 43 44 45a b Enter the final maturity date of the GIC Enter the name of the GIC provider Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . If this issue is a loan made from the proceeds of another tax-exempt issue, check box110. 11 and enter the following information: Enter the date of the master pool obligation IP - Enter the EIN of the issuer of the master pool obligation'''. Enter the name of the issuer of the master pool obligationlo. If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . If the issuer has identified a hedge, check here O. 0 and enter the following information: Name of hedge providerlo. Type of hedge P. Term of hedge If the issuer has superintegrated the hedge, check box . . . . . . . If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . If the issuer has established written procedures to monitor the requirements of section 148, check box . lib If some portion of the proceeds was used to reimburse expenditures, check here 2J and enter the amount of reimbursement . . . . . $50,000 Enter the date the official intent was adoptedlo. May 7, 2013 35 iqa 36a 7 LJ Signature and Consent Paid Preparer Use Only Under penalties of penury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's retum information, as necessary to process this return, to the person that I have authorized above. Signature of i uer's horized repr 0 13 Date Cindy Epperson, Dir. of Finance & Budget Type or print name and title Print/Type preparer's name Edward A. McCullough Preparer's si natur Firm's name lb- Pacifica Law Group LLP Date Firm's address r• 1191 Second Ave, Suite 2100, Seattle, WA 98101 PTIN P01066582 45-1446671 (206) 245.1700 Form 8038-G (Rev. 9-2011) Check LJ if self-employed Fim'sEiN 10 Phone no, AFFIDAVIT OF MAILING STATE OF WASHINGTON ) ) ss. COUNTY OF KING Kristin Patterson, being duly sworn, deposes and says that she is a citizen of the United States and over the age of eighteen years; that she is a resident of Snohomish County, Washington. That on July 19, 2013, at L. C a i m she caused a Form 8038-G, completed by City of Yakima, Washington, regarding its Limited Tax General Obligation Bond, 2013, to be mailed by depositing the same in the United States mail, in a sealed e' -lope, certified delivery, first class, postage prepaid, properly addressed to the Departmenr o the Treasury, Internal Revenue Service Center, Ogden, UT 84201. aD\V-k-ID . A IILIK416.„ I certify that I know or have satisfactory evidence that Kristin Patterson is the person who appeared before me, and said person acknowledged that she signed this instrument, and acknowledged it to be her free and voluntary act for the uses and purposes mentioned in the instru ment. Dated: (Use this space for notarial siarnp/seal Print Name My commiss on expires 4 4EIIWDIPLf 00, 000 00 1, ;esp r'.4;3tTi 4 4*... 3:4,oilEny 1H.r. sesPesS pop: ps.syss. sod Ks:kisses (..s111se Pees es 2(2 Can F.,..1:4*-.!;Cri.: thiS Zi:*P cse ms.S.pases ...cs 11.ssa ,P space psasts.. 1..)311a 44:14.SritV 00 C00 0; fr4c, Expmas RsIrode,vA r•—• Pecs '31111.P ca1s0 ssi 2CSA. SessesS; EMbank. Herbert F. Neufeld Vice President & Community Banking Credit Liaison U.S. Bank National Association Government Banking Division 9th Floor (EP-MN-S9GB) 101 East 5th Street St. Paul, MN 55101-1860 April 26, 2013 Tara Lewis, CPA Financial Services Manager City of Yakima 129 N. Second St. Yakima, WA 98901 Re: $5 million paving financing U.S. Bank National Association ("U.S. Bank") is pleased to consider your request to provide financing to the City of Yakima, Washington ("City"). A summary of some of the terms U.S. Bank is considering for this financing package is as follows: Re: $5 Million City of Yakima, Washington Non -voted General Obligation Bond ("Bond") The Bond financing to the City, is for the permanent financing for City pavement improvements. Fixed Rate Bond: Amount: $5 Million Length: 5 years (15 -year amortization) Rate Reset: Each 5th year anniversary (not less than 180 days notice to the City). Put Option: U.S. Bank retains the right to put the loan back to City each 5th year. There can be no automatic extension. Interest Rate Features: All rates are subject to change with market conditions until formally locked by an agreement between the City and U.S. Bank. All rates assume a 301360 -day interest ac al basis. All rates assume that the City and legal counsel will designate the Bond as tax-exempt (bank qualified) under existing federal tax regulations. Interest Rates: A fixed rate, based upon an indicative rate of 1.67% per annum as of April 26, 2013, such rate to be adjusted as of the date of funding so as to maintain the same margin over U.S. Bank's cost of funds as that wtiich is included in the above indicative rate. The rate will be reset each 5 anniversary for the duration of the Bond. Payments: Rate, above, assumes monthly interesand monthly principalpmymmnt that result in, essentially, level annual debt service requirements over the 15 -year amortization period. Prepayments: Prepayment is allowed, in whole ar in part, on any rate resel date without prepayment fee. Otherwise, prepayment of the Bond is not expected. Ho ver, prepaymerlts may be allowed by U.S. Bank on other than a rate reset date but will be subject to U.S. Bank's standard breakfunding prepay nt provisions. Prepayments allowed by US. Bank may, therefore, incur a prepayment fee if the future market (at the time of prepayment) is one of lower interest rates than the market s at the original closing date. U.S. Bank's standard "breakfunding" prepayment Ianguage will be provided to legal counsel for inclusion in the documents. Put Option: U.S. Bank has the option to "put" the loan back to the City should 11 decide not to offer a 5 -year maturity extension or if the City and U.S. Bank cannot agree on a new interest rate or other bond provisions for the next 5 year period. US. Bank will provide 180 days notice should it decide to not exiend the loan for an additional 5 year terrri, Should US. Bank and the City not mutually agree on a new interest rate and/or changes to the payment or structure provisions or if the Bank fails to reset the ratmature year. Default Interest Rate: The default interest rate will be the stated rate plus 296. Securitv: The Bond wiH be a non -voted generat obligation of the City. US. Bank will not take a subordinate lien position or be in a less than senior level position to any other financing. Bond Counsel: The toan documents and an unqualified legal opinion must be provided by a nationally recognized bond counsel that is currently listed in the "Red Book" more formally kno as the Bond Buyer's Municipal Marketplace ("Bond Counsel"). The Pacifica Law Group is acceptable 10 U.S. Bank 10 perforrn as Bond Counsel, Costs: Various costs, expenses and fees relating to due diligence and Bond documentation, including all legal fees and expenses are the responsibility of the City. U.S. Bank will not charge its customary $5.00Oset-up fee. US. Bank does not expect to require separate Bank Counsel for this financing and will be permitted to rely on the documents and legal opinion of the City's Bond Counsel. Covenants: The City will covenant 10 maintain rates, fees, and revenues 10 result in a miriimum debt service coverage (funds availabte for debt service divided by the amount of debt service) of 1.00 times. Failure to maintain this coverage ratio for 2 consecutive years will result in an automatic adjustment of the interest rate to the Default Interest Rate. The City will covenant to automatically provide the Government Banking Division of U.S. Bank with copies of its annual, audited financial statements within 330 days of the end of each fiscal year for the duration ofthe Bond. Other: U.S. Bank's continued involvement with this financing is predicated upon U.S. Bank obtaining credit approval of the various terms, conditions, and creditworthiness of the City. The credit approval process includes the mandatory analysis of the City's most recent three years 0? audited financial statements. We hereby acknowledge our possession of those audited financial statements. Documentation will include standard covenants regarding maintenance of business operations, adequate insurance coverage, agreement to take alt actions necessary to preserve tax-exempt status af the obligation, and to collect fees, taxes and other revenues inonamount suffin|erdto meet alt City obligations, including debt service on this Bond. Alt funds transfers must be directly deposited to a U,S, Bank account. Documentation for the transaction will be prepared by Bond Counsel and will include an appropriate authorizing resolution or ordinance, 8038 filing, and Bond Counsel opinion that the Bond is a legal, valid, binding, enforceable and properly authonzed obligation of the City. The City will designate the Bond as a "tax-exempt, bank qualified obligation" under section 265(b) of the Internal Revenue Code of 1986, as amended, for investment by financial institutions. As obtain more information, additional substantive conditions will be required and terms may be changed or be supplemented. In addition, upon completion of our analysis and due diligence and if obtain credit approval of this proposal, Bond Counsel will prepare loan documentation which will include terms and conditions customary to U.S. Bank, as well as warranties and covenants specific to this transaction. To that end, this letter is an expression of interest only, and it is not a contract, commitment nor intent to be bound. U.S. Bank does not intend that this letter or discussions relative to the terms of this letter create any legal rights or obligations, implicit or explicit, in favor of or against the other party. Also, no oral discussions andlor written agree nts shall be in place of or supersede written loan agreements executed by your business and accepted by U.S. Bank. Thank you for discussing your financing needs with U.S. Bank. Should you wish us to continue to consider your credit request, you will be responsible for all of U.S. Bank's out-of-pocket expenses related to this financing request. We look forward to the opportunity to consider your credit request. If you have any questions regarding this letter, please contact me at (651) 466-8605. Very truly yours, U.S. BANK NATIONAL ASSOCIATION b -N Herb Neufeld Vice President & Senior Lender Govemment Banking Division Direct: 651.466.8605 Mobile: 651.233.0589 Fax: 651466.9810 Herbert.Neufeldg.USBank.com .USBank.com Mbank. Herbert F. Neufeld Vice President & Community Banking Credit Liaison U.S. Bank National Association Government Banking Division 91h Floor (EP-MN-S9GB) 101 East 5th Street St. Paul, MN 55101-1860 June 10, 2013 City of Yakima Yakima, Washington Re: City of Yakima, Washington, Limited Tax General Obligation Bond, 2013 Ladies and Gentlemen: The undersigned hereby represents that U.S. Bank National Association (the "Purchaser") has made a complete investigation of the information furnished to us by the City of Yakima, Washington (the "City") relating to its Limited Tax General Obligation Bond, 2013, in the aggregate principal amount of $5,000,000 (the "Bond"), issued pursuant to Ordinance No. 2013- 017 of the City. In connection with the purchase of the Bond we hereby represent and agree: 1. We have sufficient knowledge and experience in financial and business matters, including the purchase and ownership of municipal bonds and other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the Bond. 2. No official statement, prospectus, disclosure document or other comprehensive offering statement containing material information with respect to the City and/or the Bond are being issued. The Purchaser has made its own inquiry and analysis with respect to the City, the Bond and other material factors affecting the credit standing of the City, the security for the Bond, and the ability of the City to pay the Bond. We understand that no financial information in connection with this transaction has been reviewed by Pacifica Law Group LLP, bond counsel. 3. The Purchaser either has been supplied with or has had access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the City and its credit standing and the Bond, so that as a sophisticated investor the Purchaser has been able to make its decision to purchase the Bond. 4. The Bond (a) is not being regist under the Securities Act of 1933 and is not being regist d or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will not be listed on any stock or other securities exchange, (c) will : y no rating from any rating service, and (d) may not be readily marketable. The Purchaser acknowledges that as the p haser of the Bond, it must bear the • mic risk of the investment for an indefinite period of time # :use the Bond has not been registered the Securities Act of 1933 and, fore, not be sold unless they are subsequently regist d under such Act or an exemption uch regia is available. 5. The Purchaser is able its purchase of the Bond. 0 - ; he economic risk of the investment represented by 6. The Purchaser is currently acquiring the Bond primarily for its own account for investment and not with a present view to dividing their ownership with others or with a view to, or for resale in co tion with, any "distribution" (as that tern is used in the Securities Act of 1933 and rules and regulations of the Securities and Exch :e Conunission thereunder) of all or any portion of the Bond. The Purchaser has no present intention of selling, negotiating or othe disposing of the Bond. 7. The Purchaser will not assign or offer the Bond for sale in any state of the United States of A rica without first (a) taking all necessary action to qualify the Bond for offer and sale under the securities or "blue sky" laws of the United States of America or such state, or obtaining the advice of counsel that no such action is necessary because of a registration exemption; (b) complying with the condition of transfer set forth in the Bond; and (c) providing to the purchaser thereof, or any participant therein, all material information in its possession necessary to evaluate the risks and merits of the investment represented by the purchase of or rticipation in the Bond. 11,1 8. The Purchaser acknowledges that the Bond is exempt from the ongoing disclosure requirements of SEC Rule 15c2-12 under the Securities Exchange Act of 1934, as I ended. Very truly yours, U.S. BANK NATIONAL ASSOCIATION By: Na Title: Direct: 651.466.8605 Mobile: 651.233.0589 Herbert F. Neufeld Vice President Fax: 651.466.9810 Flerbert.NeuteldOUSBank.com .U3Bank.com RECEIPT FOR BOND U.S. Bank National A s clation (the "Purchaser") hereby acknowledges receipt of the City of Yakima, Washington, Limited Tax General Obligation Bond, 2013, in the aggregate principal amount of $5,000,000. Dated this 10th day ofJune, 2013. U.S. BANK NATIONAL ASSOCIATION By Name: Title: Herbert F. Neufeld Vice President CERTIFICATE OF DELIVERY I, C Y EPPERSON, Director of Finance and Budget of the City of Yakima, Washington (the "City"), do hereby certify that on this date the City delivered to U.S. Bank National Association, as the purchaser (the "Purchaser"), the City's Limited Tax General Obligation Bond, 2013 in the aggregate principal amount of $5,000,000. Dated this 10th day of June, 2013. CITY OF YWASHINGTON By Cindy Epperson Director of Finance and Budget STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia Street SW P.O. Box 42525 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 BOND 101 REPORT FORM Issue ID: 1309-041 Date Submitted: 0912712013 ISSLer . . Name of Issuer: City of Yakima Address of Issuer: 129 North Second Street Yakima, WA 98901 Issue Type: City!Town Principle User, if different than issuer: Counties in which the entity using the bond proceeds is located: Yakima 0 Various Counties - More than four o Statewide Issue Type and Title Was this bond voter approved? 0 Yes II No Exact title of issue: Limited Tax General Obligation Bond, 2013 Issue Sale Method: Private Placement If Competitive Bid, number of bids: Debt Type: GO Bond Debt Category: Bond Series: 2013 New/Refund/Combo: New Issue IsstieD.., Dated Date of Issue: 06/10/2013 Issue Closing Date: 06/10/2013 Date of Issue Sale: 05/07/2013 Issue Maturity Date: 06/20/2018 Issue Purp., , Purpose of Proceeds: Financing costs of street improvements in the City Purpose Type: Streets/Roads/Bridges Is this a Bond Cap issuance? 0 Yes M No If yes: Bond Cap Use Category: Project Title: Bond Cap Amount: Pall/ 4. . nterest Rates Tax -Exempt Par Value: $5,000,000.00 Net Tax -Exempt Interest Rate: 1.67% 0 Variable Taxable par Value: $0.00 Net Taxable Interest Rate: 0% 0 Variable Total Par Value: $5,000,000.00 Discount: $0.00 Premium: $0.00 uo Costs Printed on 9/27/2013 3:33:12 PM Page 1 of 3 STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia StreeSW P.n.Box 42525 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 Underlying security that supports the debt (e.g. taxes or other revenue streams taxes Gross Underwriting Spread: $0.00 0 Estimate Underwriting Spread per $1 000: $0.00 Bond Counsel Fee: $8.000D0 0 Estimate Legal/Underwriter's Counsel Fee: $0.00 0 Estimate Adminni\naVve/Commixxionrao: $0.00 0 Estimate Feasiblity Study Cost: $0.00 0 Estimate Rating Agency Fee: $0.00 0 Estimate Trustee Fee: %0.00 0 Estimate Credit Enhancement: $0.00 0 Estimate Escrow Costs: $0.00 0 Estimate Financial Advisor Fee: $0.00 0 Estimate Bond Insurance: $0.00 0 Estimate Printing, inc. Office Statement: $0.00 0 Estimate Out -of -State Travel: $0.00 0 Estimate Miscellaneous: $0.00 0 Estimate isawmnaw,om Name of Financial Advisor: N/A Name of Bond Counsel: Pacifica Law Group LLP Name Of Lead Underwiter(s): US Bank National Association Name Of Compariy Irisuring Bond: N/A Name of Bond Registrar: The Gity of Yakima Name of Trustee: N/A — Bond Rad !~ Standard &Pnor'o: N/A Mood/s: N/A Fitch: N/A Are bond covenants available ' • Yes O No Is an Official Statement available? 0 Yes IN No Report C - .�� Reporter Name: Kristin Patterson Title: Paralegal Affiliation: Pacifica Law Group LLP Printed on 9/27/2013 3:33:13 PM Page 2 of 3 STATE OF WASHINGTON DEPARTMENT OF COMMERCE 906 Columbia StreeSW P.0.Box 42u25 Olympia, WA 98504-2525 Phone: 360/725-5021 Fax: 360/586-4162 Address: 11912nd Ave, Suite 210V Seattle, WA 98101-1758 Email: kristin.oatterson@pacificalawgroup.com Printed on 9/27/2013 3:33:13 PM Page 3 of 3 UNITED STATES OF AMERICA 1 R-1 STATE OF WASHINGTON CITY OF YAKIMA LIMITED TAX GENERAL OBLIGATION BOND, 2013 INTEREST RAFE: 1.670% MATURITY DATE: JUNE 20, 2018 REGISTERED OWNER: U.S. BANK NATIONAL ASSOCIATION PRINCIPAL AMOUNT: FIVE MILLION AND NO/100 DOLLARS $5,000,000 The City of Yakima, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (the "City"), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, on or before the Maturity Date identified above, the Principal Amount identified above. This bond shall bear interest at the fixed rate stated above (the "Interest Rate"). Interest on this bond shall accrue from its dated date until paid and shall be computed per annum on the principal amount outstanding on a 30/360 basis. Principal of and accrued interest on this bond shall be payable monthly on the dates set forth in the payment schedule attached hereto. The Maturity Date of this bond may be extended at the option of U.S. Bank National Association and with the consent of the City, as provided in the hereinafter defined Bond Ordinance. Both principal of and interest on this bond shall be payable in lawful money of the United States of America. Principal and interest on this bond shall be payable by check or warrant or by other means mutually acceptable to the Registered Owner and the City. Upon final payment of principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation at the office of the Bond Registrar in accordance with Ordinance No. 2013-017 of the City (the "Bond Ordinance"). This bond is issued pursuant to the Bond Ordinance to finance the costs of certain street improvements and to pay costs of issuance for the bond. Capitalized terms used in this bond have the meanings given such terms in the Bond Ordinance. The City may prepay this bond as provided in the Bond Ordinance. Any such prepayment may be subject to a Prepayment Fee. This bond has been designated by the City as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Code. The City has in the Bond Ordinance authorized the creation of a fund to be used for the payment of debt service on this bond, designated as the "Bond Redemption Fund" (the "Bond Fund"). The Bond Fund shall be drawn upon for the sole purpose of paying the principal of and interest on this bond. The City hereby irrevocably covenants and agrees with the owner of this bond that it will include in its annual budget and levy taxes annually, within and as a part of the tax levy permitted to the City without a vote of the electorate, upon all the property subject to taxation in amounts sufficient, together with other money legally available therefor, to pay the principal of and interest on this bond as the same shall become due. The full faith, Page 1 of 4 "V° credit and resources of the City are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Bond Registrar or its duly designated agent. This bond is issued pursuant to the Constitution and laws of the State of Washington, and duly adopted ordinances of the City. This bond is transferable upon compliance with the conditions set forth in the Bond Ordinance. It is hereby certified that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done and performed precedent to and in the issuance of this bond exist, have happened, been done and performed and that the issuance of this bond does not violate any constitutional, statutory or other limitation upon the amount of bonded indebtedness that the City may incur. IN WITNESS 1 REOF, the City of Yakima, Washington, has caused this bond to be executed by the manual or facsimile signature of the Mayor of the City Council and attested by the manual or facsimile signature of the Clerk, as of this 10th day of June, 2013. REGIST TION CERTIFICATE This bond is registered in the name of the Registered Owner on the books of the City, in the office of the Director of Finance and Budget of the City (the "Bond Registrar"), as to both principal and interest, as noted in the registration blank below. All payments of principal of and interest on this bond shall be made by the City from the Bond Fund. Date of Registration June 10, 2013 Name and Address of Registered Owner U.S. Bank National Association Government Banking Division 9th Floor (EP-MN-S9GB) 101 East 5th Street St. Paul, 55101-1860 'W° Signature of Bond Registrar Director o Finance and Budget PAYMENT SCHEDULE Principal and interest on this bond shall be payable as set forth in the following schedule: Date Principal Interest Total Payment 07/20/2013 22,158.04 9,277.78 $ 31,435.82 08/20/2013 24,508.33 6,927.50 31,435.83 09/20/2013 24,542.44 6,893.39 31,435.83 10/20/2013 24,576.59 6,859.23 31,435.82 11/20/2013 24,610.80 6,825.03 31,435.83 12/20/2013 24,645.05 6,790.78 31,435.83 01/20/2014 24,679.34 6,756.48 31,435.82 02/20/2014 24,713.69 6,722.14 31,435.83 03/20/2014 24,748.08 6,687.75 31,435.83 04/20/2014 24,782.52 6,653.30 31,435.82 05/20/2014 24,817.01 6,618.82 31,435.83 06/20/2014 24,851.55 6,58428 31,435,83 07/20/2014 24,886.13 6,549.69 31,435.82 1408/20/2014 24,920.77 24,955.45 6,515.06 09/20/2014 6,480.38 31,435.83 31,435.83 10/20/2014 24,990.18 6,445.65 31,435.83 11/20/2014 25,024.96 6,410.87 31,435.83 12/20/2014 25,059.78 6,376.04 31,435.82 01/20/2015 25,094,66 6,341.17 31,435.83 02/20/2015 25,129.58 6,306.25 31,435.83 03/20/2015 25 164.55 6271.27 31,435.82 ItIl 25,199.57 , 04/20/2015 , 6.236.25 . 05/20/2015 25,23464 6,201.18 31,435.82 31,435.82 06/20/2015 25,269.76 6,166.07 31,435.83 07/20/2015 25,304.93 6,130.90 31,435.83 08/20/2015 25,340.14 6,095.68 31,435.82 09/20/2015 25,375.41 6,060.42 31,435.83 10/20/2015 25,410.72 6,025.10 31,435.82 11/20/2015 25,446.09 5,989.74 31,435.83 12/20/2015 25,481.50 5,954.33 31,435.83 01/20/2016 25,516.96 5,918.87 31,435.83 02/20/2016 25,552.47 5,883.36 31,435.83 4 03/20/2016 25,588.03 5,847.79 31,435.82 04/20/2016 25,623.64 5,812.18 31,435.82 05/20/2016 25,659.30 5,776.53 31,435.83 06/20/2016 25,695.01 5,740.82 31,435.83 07/20/2016 25,730.77 5,705.06 31,435.83 08/20/2016 25,766.58 5,669.25 31,435.83 09/20/2016 25,802.44 5,633.39 31,435.83 10/20/2016 25,838.35 5,597.48 31,435.83 11/20/2016 25,874.30 5,561.52 31,435.82 12/20/2016 25,910.31 5,525.51 31,435.82 01/20/2017 25,946.37 5,489.46 31,435.83 Page 3 of 4 ' 7' ' 7 7- — Date Principal Interest Total Payment 02/20/2017 25,982.48 5,453.35 31,435.83 03/20/2017 26,018.64 5,417.19 31,435.83 04/20/2017 26,054.85 5,380.98 31,435.83 05/20/2017 26,091.11 5,344.72 31,435.83 06/20/2017 26,127.42 5,308.41 31,435.83 07/20/2017 26,163.78 5,272.05 31,435.83 08/20/2017 26,200.19 5,235.64 31,435.83 09/20/2017 26,236.65 5,199.18 31,435.83 10/20/2017 26,273.16 5,162.66 31,435.82 11/20/2017 26,309.73 5,126.10 31,435.83 12/20/2017 26,346.34 5,089.49 31,435.83 01/20/2018 26,383.01 5,052.82 31,435.83 02/20/2018 26,419.72 5,016,10 31,435.82 03/20/2018 26,456.49 4,979.34 31,435.83 04/20/2018 26,493.31 4,942.52 31,435.83 05/20/2018 26,530.18 4,905.65 31,435.83 06/20/2018 3,498,486.15 4,868.73 3,503,354.88 11 Total 5,000,000.00 358,068.68 $ 5,358,068.68 1 1 Page 4 of 4 III - _Ne PACIFICA LAW GROUP June 10, 2013 City of Yakima Yakima, Washington U.S. Bank National Association St. Paul, Minnesota Re: City of Yakima, Washington Limited Tax General Obligation Bond, 2013 - $5,000,000 Ladies and Gentlemen: T 206.245.1700 1191 2nd Avenud. Surto 2100 Seattle, WA 98101-2945 pacificalawgroup.com We have acted as bond counsel to the City of Yakima, Washington (the "City"), and have examined a certified transcript of all of the proceedings taken in the matter of the issuance by the City of its Limited Tax General Obligation Bond, 2013, in the principal amount of $5,000,000 (the "Bond") issued pursuant to Ordinance No. 2013-017 of the City adopted on May 7, 2013 (the "Bond Ordinance"), to provide funds to make certain street improvements in the City and to pay costs of issuance of the Bond. Capitalized terms used in this opinion have the meanings given such terms in the Bond Ordinance. The Bond may be prepaid prior to maturity as provided in the Bond Ordinance. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Ordinance and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bond has been legally issued and constitutes a valid and binding general obligation of the City, except to the extent that the enforcement of the rights and remedies of the holders and owners of the Bond may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. City of Yakima U.S. Bank National Association June 10, 2013 Page 2 2. The Bond Ordinance is a legal, valid and binding obligation of the City, has been duly authorized, executed and delivered and is enforceable in accordance with its terms, except to the extent that enforcement may be limited by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors, by the application of equitable principles and the exercise of judicial discretion. 3. Both principal of and interest on the Bond are payable out of annual levies of ad valorem taxes to be made upon all of the taxable property within the City permitted to be levied without a vote of the electorate in the amounts which, together with other available funds, will be sufficient to pay such principal and interest as the same shall become due. 4. Interest on the Bond is excludable from gross income for federal income tax purposes under existing law and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, interest on the Bond is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the issuance of the Bond in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The City has covenanted to comply with all applicable requirements. Failure to comply with certain of such covenants may cause interest on the Bond to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bond. The City has designated the Bond as a "qualified tax-exempt obligation" within the meaning of Section 265(b)(3) of the Code. Except as expressly stated above, we express no opinion regarding any other federal or state income tax consequences of acquiring, carrying, owning or disposing of the Bond. Owners of the Bond should consult their tax advisors regarding the applicability of any collateral tax consequences of owning the Bond, which may include original issue discount, original issue premium, purchase at a market discount or at a premium, taxation upon sale, redemption or other disposition, and various withholding requirements. This opinion is given as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, PACIFICA LAW GROUP LLP BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: 5/7/2013 ITEM TITLE: SUBMITTED BY: Ordinance authorizing the issuance and sale of a Limited Tax General Obligation Bond of the City in the principal amount of not to exceed $5,000,000 for the purpose of financing costs of street improvements in the City; providing the form of the bond; and authorizing the sale of the bond to U.S. Bank National Association Cindy Epperson, Director of Finance and Budget Tara Lewis, Financial Services Manager SUMMARY EXPLANATION: The City Council adopted 2013 budget includes a $5 million commitment to repair and resurface 28 lane miles of roads. Prior to issuing bonded debt on the City's behalf it is necessary, per section 12 of the City Charter, that the Council approve the terms and form of the bond by Ordinance. Historically, the City has issued municipal bonds to accomplish a project like this. However, in current market conditions, bank financing is a better option for us, and the City was able to • obtain favorable debt terms. Bank financing has much lower "up front" costs, as there is not an Official Statement to prepare and there is no underwriting fee. Bond Counsel is still necessary, but since there is considerably Tess risk and fewer disclosure requirements, the fee will be 40% Tess than a traditional bond issue. Another cost usually imposed is a loan origination fee, which the bank has waived for the City. Overall the cost of bank financing will save the City at least $40,000 in direct costs and uses fewer staff resources. The enclosed Bond Ordinance will authorize staff to take all necessary steps to secure bank financing in the form of a Limited Tax General Obligation bond (i.e. councilmanic, not voted) in an amount not to exceed $5M, for up to three 5 -year terms (for a total amortization of 15 -years), at an initial interest rate of 1.67%, with an annual debt service of approximately $380,000. City engineering staff has put the construction project out to bid --Note: the bid opening was held on April 30, and low bid was well under the $5 M threshold. It is likely that we can add several lane miles to the project and stay within budget. Staff will evaluate options for the additional funding availability and will award the bid within the next 30 days. The bond issuance team is requesting approval of the Bond Ordinance at this time in order to be able to fully execute the financing transaction before the commencement of construction and to take advantage of a dip in the interest rate market not expected to continue into the next calendar month. Attached is a Memo summarizing the process leading to the Bond Ordinance contained herein. Resolution: Other (: Contract: Start Date: Ordinance: X Contract Term: End Date: Item Budgeted: Yes Amount: $5.000.000 Funding Source/Fiscal General Fund Revenues - Limited General Tax Impact: Obligation Strategic Priority: Improve the Built Environment Insurance Required? No Mail to: Phone: APPROVED FOR SUBMITTAL: City Manager RECOMMENDATION: Pass Ordinance ATTACHMENTS: Name: Memo to Street Financing Ordinance.docx El Bond Ordinance -/Too Bond 2013 (Private Placement un Bank) City of Yakima 5/- 13 Mtgooc || u s Bank Proposal 0*252013 nuocx Description: wemnuetailsm financing Bond Ordinance Bank Proposal